Refusing to spend is a major disadvantage for the US in the technology race with China

Refusing to spend is a major disadvantage for the US in the technology race with China

Washington tries to pressure Beijing by imposing prohibitions on Chinese technology businesses, but has not yet invested heavily in the technology race.

After Huawei, China's top semiconductor maker SIMC is on the blacklist of export restrictions.  Photo: AFP
After Huawei, the US is “incubating” the blow to core Chinese technology companies such as semiconductor maker SMIC. Photo: AFP

Putting Chinese telecommunications technology corporation Huawei on a “black” list of banned parts and components from the US, or the latest hottest move is to force TikTok to sell itself if not want to be shut down in the US market. … shows Washington trying to put pressure on Chinese tech businesses.

Earlier this month, the US Department of Defense announced the agency was in talks about bringing China’s top semiconductor maker. SMIC blacklisting restrictions on exports.

Last month, in a deliberate move to “oust” listed Chinese companies, including big tech names, out of the US stock market, the US President’s financial working group has “red alerted” to US stock exchanges that they need to establish new rules to trigger delisting Chinese companies, after fears that US investors may be deceived island. This group requires, to trade on US exchanges, the listed companies must allow the regulators to access the documents and audit activities of the business.

These moves show that the US is not willing to spend money in the technology race with China. This is a major disadvantage for the US in this race, said James Andrew Lewis, Vice President and Director of the technology policy program at the Center for Strategic and International Studies (CSIS).

“Compared to the US, the level of spending China spent for semiconductor technology like 1,000-on-1, “said Lewis – who has had time working at the State Department and the US Commerce Department – while the US has bipartisan support to attend. Law on raising federal incentives for the semiconductor industry, but so far incentives are still on paper and “can not be money”.

Developing core technologies as semiconductors is one of the main races in the US-China technology race, alongside the races for the dominant position in artificial intelligence and quantum computing. “They (the US) are realizing that in the technology race with China, they will have to spend more money,” Lewis added.

SMIC is one of the major semiconductor manufacturers present on an ambitious show China’s about separate semiconductor industry development. Currently most of the chips used in China are imported and this reveals the weakness of the second largest economy in the world when it has to depend on foreign sources of high quality semiconductors.

The Chinese government has pumped money major to develop semiconductor industry. According to Reuters, China’s National Microchip Industry Investment Fund (CICF) spent 139 billion yuan ($ 20 billion) on chip production projects in 2014 and aggressively added 204 billion. RMB ($ 29.8 billion) in 2019. These expenditures have increased the attractiveness of the Chinese semiconductor industry to private investors.

Still, it will take at least a decade for China to catch up with today’s America’s high-quality chip manufacturing capabilities – a field that requires high scientific accuracy and content, according to Vice President, Center for Strategic and International Studies. According to this expert, the moves of Washington aimed at Chinese technology enterprises are aimed at dragging down China’s development in the semiconductor industry.

“Despite the disadvantages, China still has advantages such as a willingness to invest heavily in technology and a high determination of the government”, commented Mr. Lewis.

On the US side, in a recent tough move, US President Donald Trump on September 10 announced that the deadline for the internet technology company ByteDance to sell its TikTok business in the US market is not extended. “TikTok will have to close or they (ByteDance) have to sell it,” Trump told reporters.

The TikTok side has not yet commented on Trump’s statement.

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