U.S. Commerce Secretary Critiques Chip Sanctions on China: "A Misguided Attempt"

As the U.S. government intensifies its efforts to impose sanctions aimed at curtailing China's chipmaking capabilities, Gina Raimondo, the U.S. Secretary of Commerce, has expressed skepticism about the effectiveness of such measures. "Trying to hold China back is a fool's errand," she stated, asserting that the Biden administration's CHIPS and Science Act is far more critical than export restrictions. The U.S. government aims to prohibit advanced chips, particularly those utilized by military applications like 5G, from reaching Chinese manufacturers.

The CHIPS and Science Act has led to an unprecedented surge in U.S. investments in chip infrastructure, amounting to more spending in just one year than was allocated in the past 28 years combined. Despite this, the Biden administration has persisted with initiatives to prevent Chinese firms from acquiring chips and semiconductor manufacturing equipment from overseas partners, particularly from the Netherlands, home to the only producer of Extreme Ultraviolet Lithography (EUV) machines, ASML.

The EUV machines are integral for inscribing intricate circuitry patterns on silicon wafers; without access to this technology, China's leading semiconductor manufacturer, SMIC, must depend on older Deep Ultraviolet Lithography (DUV) machines for producing 7nm chips.

Raimondo has spearheaded initiatives to position the Commerce Department as the primary force in bolstering the U.S. semiconductor industry. Her insights indicate that while safeguarding sensitive technologies is vital, the sanctions and export restrictions are merely "speed bumps," offering little resistance to China's long-term ambitions to achieve global technological supremacy.

Last year, Raimondo visited China during Huawei's launch of the Mate 60 Pro, the first smartphone featuring an in-house chip since 2020. The device, capable of supporting 5G technology, marked Huawei's return to the 5G market post-U.S sanctions. This prompted concerns among U.S. lawmakers that the sanctions imposed were insufficient to hinder the progress of China's tech sector. Raimondo took a differing perspective, emphasizing that the chip powering Huawei's Mate 60 Pro used a relatively obsolete 7nm manufacturing process, significantly less advanced than the 3nm technology utilized in the A17 Pro chip of the iPhone 17 Pro series. Of the Mate 60 Pro, she commented, "It's not a very competitive phone."

While the transition in U.S. leadership may bring changes to the Department of Commerce's policies soon, there are indications that former President Trump may propose an ambitious tariff strategy aimed at further evolving U.S. chip production. Although such tariffs place a financial burden primarily on American consumers and businesses, there are serious concerns that aggressive trade policies might harm the U.S. economy, inadvertently causing a decline in trade relations with China.

In the current landscape, SMIC has established itself as the third-largest foundry globally, following TSMC and Samsung. Yet, with restrictions barring access to EUV Lithography technology, the company is limited in its ability to manufacture chips beyond the 7nm node. Despite these constraints, China remains committed to innovating to advance its semiconductor capabilities and compete against the faster, more energy-efficient chips being developed elsewhere.