US chip ban on China a dangerous game for all

The United States has once again resorted to politicizing and weaponizing technology to suppress its imagined enemy.

Washington has doubled down on its hi-tech rivalry with Beijing by imposing a sweeping set of export controls last month to cut China off from certain semiconductor chips and chip-making equipment. It marks the most significant move by the United States against China on technology exports in decades, heralding a real "Chip War," as Chris Miller, a history professor at Tufts University, said in his latest book.

According to London-based data consulting company GlobalData, the new export rules "transcend" the sector itself and are all about the leadership of the global economy in the next few decades. That explains why the United States is trying everything to form an exclusive circle of chip production and supply chains without China, much like how it barred China from the International Space Station since 2011.

This wishful "chip containment" is like putting US declining technological hegemony on a respirator, which will only slow its ride toward death. As semiconductors are one of the most globalized industries driven by the principles of economics where different knuckles of the supply chain are closely intertwined, the chip ban on China would, at best, give the United States a Pyrrhic victory.

With its sizeable market, China, the second-largest economy in the world, is a land of opportunities for foreign companies, including those from the United States. According to the South China Morning Post (SCMP), sales to China, the biggest buyer of US chips, could amount to more than 60 percent of the revenues for companies like Qualcomm, Texas Instruments and Intel.

While a real-life "Wolf's Coming" featuring "China threats" and "geopolitical risks" may scare some foreign companies away from China, the higher cost of redeploying semiconductor production will finally be reflected in the rising prices of tech products, especially consumer electronics.

Many tech firms have already felt the negative impact of the ban. KLA and Lam Research, two world-leading US chip equipment suppliers, have halted their respective support for their Chinese client YTMC. ASML, Europe's largest chip equipment manufacturer, has asked its US employees to stop providing services to its Chinese clients. Some Asian semiconductor manufacturers, like TSMC, SK Hynix and Samsung, were only a bit luckier, given a one-year postponement to comply with the rules.

To contain China, the United States has gone so far as to blackmail its own citizens and entities. Under the new ban, US nationals are prohibited from "supporting" the development or manufacture of chips in China. Statistics from The Wall Street Journal showed the ban leaves at least 43 US citizens currently working as executives in 16 publicly listed Chinese semiconductor companies no choice but to quit their jobs. The SCMP said many affected executives are "naturalised citizens who were born in China and studied at American universities or worked in the US chip industry."

The US chip ban on China "was less a decoupling and more a rupture" and "will carry a heavy cost," the Financial Times has warned.

Indeed, for policymakers in the White House who are hellbent on stopping China's technological development, it is time to heed the warning and wake up to the fact that in its dangerous anti-China game, everyone loses.