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U.S. Chip Policy against China Has Shown Results

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that the Chinese tech giant Huawei is once again facing new technology curbs amid an escalation in U.S.-China strategic competition. Some scholars pointed out that, under the cooperation of the United States, Japan and the Netherlands, China’s semiconductor industry is facing real danger. Also, two months after China’s largest chipmaker, Yangtze Memory Technology, was included in the “Entity List” of entities banned by the U.S. Department of Commerce, it announced plans to lay off 10 percent of its workforce. The U.S. government has stopped issuing permits to U.S. companies to export most products and technology to Huawei. This move highlights that the United States has further tightened regulations and related policies on technology exports to China. Chinese Foreign Ministry spokesperson Mao Ning said at a press conference, “This is blatant technological bullying. This practice violates the principles of the market economy and the international economic and trade rules. It damages the international community’s confidence in the U.S. business environment. Mao also emphasized that the bullying behavior seriously undermines the order of international trade. Not only does it damage the legitimate rights and interests of Chinese enterprises, but it also affects the stability of the global industrial chain and the supply chain. Part of the reason for the move by the U.S. Ministry of Commerce is that Huawei has changed a lot compared to when it focused on 5G four years ago. For example, Huawei has expanded its business to submarine cables, cloud computing and other fields. Huawei has yet to comment on the matter.

Source: NetEase, February 1, 2023
https://www.163.com/dy/article/HSFTUF1A055618XM.html

Briefings | | |   Information/Technology US-China Relations

Chinese Satellite Institute Sanctioned by the U.S. for Assisting Russia

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that the U.S. Department of Treasury and the State Department simultaneously announced they would sanction China’s Changsha Tianyi Space Technology Research Institute because the Chinese company assisted Moscow’s Wagner Group during the Russo-Ukrainian War. U.S. Secretary of State Antony Blinken said in a statement that the new sanctions will further impede the Kremlin’s ability to arm its war machine. An unnamed U.S. source revealed that the U.S. has evidence that the Changsha Tianyi Research Institute is supporting Russia in the war. According to the official website of the Changsha Tianyi Research Institute, it is the pioneer and leader of China’s commercial remote sensing satellites and scientific research satellites. The core team members of the Institute are mainly from the Chinese Academy of Sciences, China Aerospace Science and Technology Corporation, China Aerospace Science and Industry Group, and other international aerospace talents. Tianyi has participated in nearly 100 aerospace development projects (including satellites, spacecraft and space stations).

Source: NetEase, January 28, 2023
https://www.163.com/dy/article/HS6LSCG305561249.html

Briefings | | |   Information/Technology US-China Relations

Following the U.S., the Netherlands and Japan to Take Action on Chinese Chip Industry

Popular Chinese online news site Redian recently republished a Bloomberg report indicating that the Netherlands and Japan, home to major suppliers of semiconductor manufacturing equipment, are about to join a Biden administration-led effort to limit exports of the technology to China. Export controls in the Netherlands and Japan could be finalized as soon as late January, according to people familiar with the matter. Japanese Prime Minister Fumio Kishida and Dutch Prime Minister Mark Rutte discussed their plans with U.S. President Joe Biden at the White House earlier this month. “I am very confident that we will get there,” Rutte told Bloomberg in an interview on the sidelines of the World Economic Forum in Davos, Switzerland. However, the Netherlands and Japan’s restrictions may not go as far as the U.S. restrictions do, which not only limit the export of U.S.-made machines but also prevent U.S. citizens from working with Chinese chipmakers. Even so, once all three countries take action, China may find itself even less able to acquire the technology or expertise needed to manufacture the most advanced semiconductors. A spokesperson for the White House National Security Council declined to comment. The U.S. Commerce Department rules are opposed by some U.S. semiconductor companies but supported by bipartisan lawmakers. China said Biden’s new chip tech curbs will hurt its economic recovery.

Source: Redian, January 19, 2023
https://redian.news/wxnews/231251

Briefings | | |   Geo-Strategic Trend Information/Technology

Global Times: Biden Administration Extends China Chip Export Restrictions to Macau

Global Times recently reported that the United States has further tightened export controls on Chinese chips and chip manufacturing equipment, and has further extended the restrictive policies imposed on Mainland China to Macau. The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce published an “interim final rule” in the Federal Register, saying that the control measures announced in October last year also apply to the Macau Special Administrative Region. The announcement claimed that the restricted exports of chips and chip manufacturing equipment may be transshipped from Macau to other places in Mainland China, so the new measures include Macau in the scope of export restrictions. After the implementation of the measure, U.S. companies will need to obtain a license to export to Macau. Last October, without any prior warning, the U.S. Department of Commerce imposed the most extensive restrictions on chip-related exports to China in history. In addition to prohibiting the export of advanced chips, technology and equipment, it also prohibits “Americans” from supporting the “development or production’ of advanced chips in Chinese companies without permission.”

Source: Global Times, January 18, 2023
https://world.huanqiu.com/article/4BLNDLEqFe3

Briefings | | |   Information/Technology US-China Relations

China’s New Energy Vehicle Growth Slowed after Subsidy Cancellation

Well-known Chinese news site Sina (NASDQ: SINA) recently reported that, according to the data just released by the China Passenger Car Association (CPCA), from January 1 to 15, the national new energy passenger car manufacturers wholesaled 187,000 units, a month-over-month decrease of 38 percent. The market retail sales reached 184,000 units, a month-over-month decrease of 33 percent. According to a report released by CPCA, on January 18, the growth of new energy vehicle sales has entered a bottleneck stage. After the discontinuation of the government’s new energy policy in 2023, sales growth will be a serious problem. At the same time, the prices of new energy models have increased too much in the early stage. Orders are decreasing and the price cuts of leading manufacturers such as Tesla have been aggressive, which has caused consumers to take a wait-and-see attitude. China’s new energy vehicle subsidies started in 2010. In that year, a total of 25 cities in three batches were selected to carry out demonstration and promotions of energy-saving and new energy vehicles. Since then, the industrialization process has started. In 2016, the subsidy policy entered the full application stage. Under the government subsidy policy dividends, the new energy vehicle market has achieved rapid development. Recently, Tesla China began to cut prices, which disrupted the market rhythm to a certain extent. After Tesla announced the price cuts, the number of new orders increased significantly, and the traffic at Tesla stores in many regions of the country increased significantly too. Some customers who originally planned to order other brands even cancelled their orders and turned to Tesla.

Source: Sina, January 20, 2023
https://finance.sina.com.cn/chanjing/cyxw/2023-01-20/doc-imyauhaw5442320.shtml

Briefings | | |   Economy/Resources Information/Technology

Global Times: TSMC Considering Building a Second Factory in Japan

Global Times recently reported that the Japanese government actively invited TSMC (Taiwan Semiconductor Manufacturing Company) to expand its manufacturing capacity in Japan and introduce EUV process. The TSMC CEO confirmed for the first time at a press conference that TSMC is indeed considering building a second factory in Japan. TSMC is currently building a fab with special process technology in Japan, which will use 12/16nm and 22/28nm process technology, and plans to enter mass production by the end of 2024. Though the first factory is still under construction, TSMC plans to build a second fab at the same time, as long as customer demand and the level of government support make sense. According to previous Japanese media reports, TSMC’s first factory is being constructed in Kumamoto Prefecture, Japan. The Japanese government had previously decided to subsidize nearly half of the 1 trillion yen investment required by TSMC to build the factory. In response to foreign government invitations, TSMC is promoting the construction of factories overseas. In last December, TSMC announced that it would increase its planned investment of US$12 billion to US$40 to build two factories in Phoenix, Arizona. 4nm and 3nm chips will be put into production in 2024 and 2026. That represents TSMC’s largest investment outside of Taiwan and one of the largest foreign direct investments in U.S. history.

Source: Global Times, January 12, 2023
https://world.huanqiu.com/article/4BG6VCqka5b

Briefings | | |   Geo-Strategic Trend Information/Technology

CNA: TSMC 3nm Started Mass Production and Factory Expansion

The Primary Taiwanese news agency Central News Agency (CNA) recently reported that TSMC (Taiwan Semiconductor Manufacturing Company) held a 3nm mass production and factory expansion ceremony. TSMC Chairman Mark Liu clearly stated that the company will continue to develop advanced technologies and expand in Taiwan. TSMC previously held a grand relocation ceremony for the Arizona factory in the United States, and decided to expand investment in the U.S. Not only was the mass production technology of the Arizona Phase One Project adjusted from the originally planned 5 nanometers to 4 nanometers, but also new investment was committed for a 3 nanometers plant. The total U.S. investment increased to US$40 billion. The 3nm mass production demonstrated TSMC’s concrete actions in developing advanced technology and expanding advanced production capacity in Taiwan. Also, TSMC’s global R&D center in Zhuke will be officially opened in the second quarter of 2023, with 8,000 personnel expected to be stationed there. In the meantime, the 2nm plant is scheduled to be launched in Zhuke and Zhongke, Taiwan. TSMC is now building super-large fabs, connecting several fabs together through automatic transfer systems and tube bridges. In response to customer demand, TSMC will expand overseas investment at the same time. TSMC (NYSE: TSM), Taiwan Semiconductor Manufacturing Company Limited, is a Taiwanese multinational semiconductor contract manufacturing and design company. It is the world’s most valuable semiconductor company and the world’s largest dedicated independent semiconductor foundry.

Source: CNA, December 29, 2022
https://www.cna.com.tw/news/afe/202212290385.aspx

Briefings | | |   Information/Technology

CNA: U.S. and Japan Plan to Cooperate in Developing Semiconductor Talents

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, with China’s significantly enhanced military strength, and in view of the rising security tensions with China, the governments of the United States and Japan are planning to cooperate to develop advanced semiconductor technology talents, with the hope of playing a leading role in the global semiconductor market. The governments are scheduled to hold a discussion in Washington in January at the U.S.-Japan Summit and Ministerial Talks to confirm the cooperative relationship. Discussions of the specifics to strengthen the talent development plan are set to kick off in the coming spring. At present, it is the most feasible plan for the United States and Japan to send researchers or students to research institutions or high-tech companies. The scope of enhanced cooperation will include new generation technologies such as artificial intelligence (AI) and supercomputers. The U.S. and Japan reached a consensus on the principles of semiconductor cooperation in May 2022. That includes promoting the diversification of semiconductor manufacturing capabilities. The two sides have their own strengths in semiconductor technology and will cooperate to complement each other. Japan’s Ministry of Economy, Trade and Industry established the Leading-edge Semiconductor Technology Center (LSTC) in December 2022. The United States is scheduled to establish the National Semiconductor Research Center under NSTC in February 2023. The two countries will strengthen the exchange of semiconductor talents, the practical application of research results, and the mass production of new-generation semiconductor technologies.

Source: CNA, December 29, 2022
https://www.cna.com.tw/news/aopl/202212290373.aspx

Briefings | | |   Geo-Strategic Trend Information/Technology