President Xi Jinping’s government sees the chips that are used in everything from phones to kitchen appliances to fighter jets as crucial assets in its strategic rivalry with Washington and efforts to gain wealth and global influence. Chips are the center of a “technology war,” a Chinese scientist wrote in an official journal in February.
China has its own chip foundries, but they supply only low-end processors used in autos and appliances. The U.S. government, starting under then-President Donald Trump, is cutting off access to a growing array of tools to make chips for computer servers, AI and other advanced applications. Japan and the Netherlands have joined in limiting access to technology they say might be used to make weapons.
Xi, in unusually pointed language, accused Washington in March of trying to block China’s development with a campaign of “containment and suppression.” He called on the public to “dare to fight.”
Despite that, Beijing has been slow to retaliate against U.S. companies, possibly to avoid disrupting Chinese industries that assemble most of the world’s smartphones, tablet computers and other consumer electronics. They import more than $300 billion worth of foreign chips every year.
The ruling Communist Party is throwing billions of dollars at trying to accelerate chip development and reduce the need for foreign technology.
China’s loudest complaint: It is blocked from buying a machine available only from a Dutch company, ASML, that uses ultraviolet light to etch circuits into silicon chips on a scale measured in nanometers, or billionths of a meter. Without that, Chinese efforts to make transistors faster and more efficient by packing them more closely together on fingernail-size slivers of silicon are stalled.
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