US Cuts Exports – No More Computer Chips for China – News


The US no longer wants to supply China with computer chips used for artificial intelligence. What does it mean when a technology suddenly becomes security relevant to science and business?

It is militarily important for the US to stay ahead of China in the production of microchips and the use of AI. For this reason, at the beginning of October, the US significantly limited the export of chips to China.

Powerful chips used for artificial intelligence (AI) are affected, as well as everything needed to make those chips: semiconductors, machines, software. In addition, American specialists are no longer allowed to support Chinese companies in the production of chips.

For national security

With this measure, the US wants to prevent China from using advanced AI and supercomputers in the military.

AI in the military

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  • Strategic planning, logistics
  • Autonomous radar, eavesdropping and signal jamming
  • Design and testing of modern missile systems

In addition, US authorities say that China is also using AI to monitor the population, violating human rights in some cases.

Although not an explicit target of the US agency’s action, the ban could also affect China’s economy. Artificial intelligence is used in many promising applications, such as web search, image and video recognition, translation, product recommendations, and autonomous cars.

Where does China stand?

China has the capacity and resources to make its own chips. But the country still lags factories in Taiwan and South Korea by about three to four years in producing the most advanced chips. In addition, China lacks the research and know-how to develop new chips – the US is the leader here.

5G, AI, quantum computing: You are often said to be on par with the US. Not so in the chip industry.

China has been promoting its chip industry for years, and the latest restrictions are likely to give further impetus to efforts to develop an independent chip ecosystem.

How is a chip made?

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  1. Design
    A lot of research and know-how is needed to develop a powerful chip. Special software is also required.
  2. manufacturing
    The chips are made in factories that look like high-tech laboratories and cost up to $20 billion. Special machines and equipment, semiconductor plates (wafers) and various chemicals are needed for production. They are produced by specialized companies all over the world.
  3. testing and assembly
    In the last step, the chips need to be tested and assembled.

However, due to the complexity of the chip industry, it takes decades to develop the necessary technological capabilities and build high-tech facilities and factories. The US embargo is likely to further slow this process.

Increasing nationalization

Chips are of fundamental importance for the economy, they are in every washing machine and in every car, and their importance is growing with digitization.

Therefore, securing the chip supply chain is not only on the political agenda in China. Also in the USA and the EU, they are trying to bring a larger part of production to their own soil.

What does this mean for Switzerland?

The new export restrictions are unlikely to have a major impact on Swiss consumers in the short term. Products may become slightly more expensive and the waiting time may be longer for individual products. In the long term, there are two risk factors that could become relevant to everyday life:

  • China’s reaction: Although China condemns the US restrictions, it has not yet taken any countermeasures. Export restrictions on less complex chips, which are built into most products, or on raw materials that are needed, for example, for electric cars or solar panels, would be conceivable.
  • Business relations: While the US and EU increasingly nationalize and coordinate their supply chains, Switzerland remains on the sidelines. In the event of a crisis, she might have trouble getting tokens.

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