'Chip war' spurs telling cry of alarm: China Daily editorial

Intel CEO Pat Gelsinger's warning that projects such as Intel's planned factory complex in Ohio will be much less necessary if the Joe Biden administration doesn't "pause" before implementing new restrictions on exports of chips to China is a telling cry of alarm.

Although US National Security Advisor Jake Sullivan said on Friday that the measures were targeted and "the vast majority of sales of chips designed by the United States to China has continued unabated", Gelsinger and the CEOs of Nvidia and Qualcomm have urged the administration to study the impact of restrictions as they are harming the US industry.

The Biden administration considers itself to be like a dragon guarding its treasure, with Sullivan claiming that the administration is "going to continue to look at very targeted, very specific restrictions on technology with national security and military applications and make judgments rigorously, carefully, methodically".

Yet during their discussions with Sullivan, Secretary of State Antony Blinken and other US officials last week, the CEOs of the US' three largest chip companies said that the restrictions had not achieved the intended outcome of slowing China's development of artificial intelligence. They pointed out that the availability and quality of the software China is using more than compensates for the hardware restrictions. Instead, the restrictions are hitting the bottom line of the US industry and putting its tech leadership at risk.

Sales in China account for one-fifth of the total worldwide sales of Intel, more than 60 percent of Qualcomm's global sales and 22 percent of Nvidia's, with the revenue helping to fund the companies' R&D efforts.

Senior US officials have repeatedly stated that the US does not seek "decoupling", but focuses on so-called de-risking — Sullivan said that the aim is to build a small yard with a high fence. Yet in practice what the administration is doing is building an ad hoc fence around as big a yard as it can in a bid to de-sinicize key industry and supply chains, partly in the belief that this will bring "lost jobs" back to the US.

But as then Apple CEO Steve Jobs famously told US President Barack Obama a decade ago: "The jobs aren't coming back."

Asia Times published an article on July 12 that reinforced that point, stressing that "the globalization of production capacity and new technology development is accelerating away from the US".

Rather than being a vigilant hoarder of treasure, the Biden administration is staking a claim to fool's gold, as its actions targeting Chinese tech companies and promises that it will bring the chip industry back home have only served to make the US companies that are the industry leaders collateral damage and spurred the globalization of chip production.