The tech war is guaranteed to make the chip industry less efficient
you don’t succeed, try again. A year ago America forbade its high-tech companies from selling to Huawei, a Chinese maker of smartphones and mobile-network infrastructure. American officials worry that Huawei-powered phone networks could aid Chinese spying , and about China’s growing technological prowess more generally. But the embargo turned out to be puny. Loopholes allowed American firms to carry on supplying Huawei from overseas factories.
The microchip is an American invention. But the chipmaking business has gone global. These days the dozen biggest semiconductor firms make only 27% of their sales in America. Just 20% of their plant is physically based there. Huawei evaded the worst effects of America’s original blacklist by switching suppliers and buying from non-American factories. The new measures focus on a bottleneck instead: a cohort of American-based chip-equipment firms whose products lack substitutes.
The episode will have broader consequences for the tech industry. China could retaliate by hobbling American tech firms that make money on the mainland, including Apple. And as the decoupling of America and China accelerates, tech firms that straddle the two are experimenting with ways to try to keep both sides happy. On May 15thsaid it would build a $12bn chip plant in Arizona.
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