Geographic complexity has made it hard for America's government to stop chipmakers' kit from reaching Huawei—hence the new focus on chipmaking tools
it in for Huawei—and not just because some of its politicians fear the Chinese giant’s networking gear lets spooks in Beijing eavesdrop on customers’ communications. The firm, a world leader in futuristic 5telecoms, also symbolises China’s technological and economic ascent. President Donald Trump does not like it one bit.
Even if the legal experts are wrong, the rule will be difficult to enforce: the clean rooms of Asian chip foundries are hard to monitor. More important, the $412bn semiconductor industry is so globalised that even the long arm of American law will struggle to pin it down. The likelier upshot of the new export controls may be to drive a portion of America’s chipmaking industry from its shores.
Consider Intel, which makes chips of its own design for customers that assemble electronic devices. In 2019 the American giant had over 35% of its $55bn in physical assets, a rough proxy for manufacturing capacity, abroad. Some $8bn-worth sat in Israel and another $4bn in Ireland. Industry insiders report that China-bound shipments from both places have increased since America’s Huawei-baiting began. Intel also has more than $5bn in assets in China, its biggest market.
Geographic complexity has made it hard for America’s government to stop chipmakers’ kit from reaching Huawei. Hence the new focus on chipmaking tools, many of which are still made in America and so easier for Washington to control. Applied Materials, based in California, builds kit used to etch patterns into silicon, has 90% of its assets in the United States.
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