Although the chip battle may have pre-dated Mr Trump, his presidency has intensified it. He has made a national champion of Qualcomm, blocking a bid for it from a Singaporean firm for fear of Chinese competition. Earlier this year an export ban on selling American chips and software to zte, a Chinese telecoms firm in breach of sanctions, brought it to the brink of bankruptcy within days. Startled by the looming harm, and (he says) swayed by appeals from Mr Xi, Mr Trump swiftly backtracked.
Two things have changed. First, America has realised that its edge in technology gives it power over China. It has imposed export controls that affect on Fujian Jinhua, another Chinese firm accused of stealing secrets, and the White House is mulling broader bans on emerging technologies. Second, China’s incentives to become self-reliant in semiconductors have rocketed. After zte, Mr Xi talked up core technologies. Its tech giants are on board: Alibaba, Baidu and Huawei are ploughing money into making chips. And China has showed that it can hinder American firms. Earlier this year Qualcomm abandoned a bid for nxp, a Dutch firm, after foot-dragging by Chinese regulators.
Neither country’s interests are about to change. America has legitimate concerns about the national-security implications of being dependent on Chinese chips and vulnerable to Chinese hacking. China’s pretensions to being a superpower will look hollow as long as America can throttle its firms at will. China is destined to try to catch up; America is determined to stay ahead.
The hard question is over the lengths to which America should go.
As Chinese chips are becoming more powerful and pervasive than those from USA, are Chips the next big battleground for the Superpowers? https://t.co/uVIvUmnXdG @TheEconomist . #Chips
— jonathan.gold97 (@jonathangold97) December 5, 2018