The Biden administration wants to outcompete China on technology through the chip-making industry. Over the past six years, the U.S. government has targeted China’s semiconductor industry. The White House declared supercomputing chips off limits to Chinese companies because they advance China’s military modernization and human rights abuses. It diplomatically engaged with the Netherlands and Japan to jointly deny advanced chip-making equipment to China. Since advanced artificial intelligence tools also require state-of-the-art chips, the White House is considering creating an investment screening mechanism that could block American investments in China’s semiconductor companies that could advance A.I. Most recently, the Biden administration is considering a further tightening of A.I. chip sales to China as chips are at the heart of A.I. development.

Focusing solely on the chip industry, the Biden administration is denying that China rules the roost in many areas that affect weaponry and human rights abuses. These include its dominance in EV battery technology, solar manufacturing and critical mineral production and processing—areas where the United States is either at a slow or non-existent start due to conflicting Biden administration policies and regulations. The Inflation Reduction Act will help build up domestic production capacity in solar manufacturing and in car batteries, but the United States is decades behind China, and unlike China, is rich in hydrocarbon energy.

Last year, China overtook Germany in automobile exports and it is on track to overtake Japan as the global leader this year. While most of these exports consist of foreign brands produced in China, the numbers reflect the deep expertise that Chinese companies have built in the government-forced era of automotive technologies, particularly in car batteries.

Chinese companies also own around 80 percent of the supply chain for solar manufacturing. Chinese electronics makers have produced a rising share of the components in Apple’s iPhone. And increasingly in products such as industrial machinery and basic household equipment, Chinese brands are joining European and Japanese companies as top competitors. China, for example, makes most of the world’s major appliances, and 80 percent of global air conditioners.

Only a small percentage of advanced chips, however, go to military uses. Although the Commerce Department has limited China’s access to the most sophisticated chips, Chinese manufacturers can continue making less-sophisticated chips. Companies need a wide range of chips, both cutting edge and basic. Power management chips, for example, are simpler to produce than the graphics-processing units that power A.I. But without them, production lines for everything from automobiles to medical devices could come to a halt.

On one hand, the U.S. government is blocking China’s progress on A.I. and supercomputing, but with the other, it is ushering Chinese companies toward concentrating their efforts on chips for products of daily use. In spite of talk of economic decoupling with a strategic competitor, the United States is enormously dependent on Chinese goods, with a goods trade deficit with China in 2022 that was the second-highest on record.

China’s “Chiplets”

Chiplet technology is a cost efficient way to package groups of small semiconductors to form one powerful chip capable of powering everything from data centers to gadgets at home. Chiplet technology now largely underpins China’s plans for self-reliance in semiconductor manufacturing since the Biden administration has barred it from obtaining advanced chips. Silicon Valley startup zGlue actually developed chiplets, but Chinese company Chipuller acquired 28 patents either owned by zGlue or invented by people whose names are on zGlue’s patents. China is using chiplet technology in applications as diverse as artificial intelligence to self-driving cars, as Huawei Technologies and military institutions explore its use. Huawei, China’s tech and chip design giant that has been put on the U.S.’s most restricted list, has been actively filing chiplet patents. Huawei published over 900 chiplet-related patent applications and grants last year in China, up from 30 in 2017.

Chiplets can be the size of a grain of sand or bigger than a thumbnail and are brought together in a process called advanced packaging. It is a technology the global chip industry has embraced in recent years as chip manufacturing costs soar in the race to make transistors so small they are now measured in the number of atoms. Bonding chiplets tightly together can help make more powerful systems without shrinking the transistor size as the multiple chips can work like one brain.

Apple’s high-end computer lines use chiplet technology, as do Intel and AMD’s more powerful chips. About a quarter of the global chip packaging and testing market is in China. Under the right conditions, chiplets can be personalized according to the needs of the customer and can be manufactured quickly, in three to four months, which is an advantage that China holds.

China’s purchase of chip packaging equipment increased to $3.3 billion in 2021 from its previous high of $1.7 billion in 2018, but fell to $2.3 billion in 2022 with the chip market downturn. Chinese government documents show grants worth millions of dollars to researchers specializing in chiplet technology, and dozens of small companies have sprung up throughout China in recent years to meet domestic demand for advanced packaging solutions like chiplets.


The Biden administration is denying China advanced chip making technology, but is allowing the country to use less sophisticated technology to make chips. China is pursuing chiplet technology that it can bond together to make one large chip that can be customized to various consumer uses such as A.I. applications in self-driving cars and in military applications. The Biden administration is trying to hold back China in one area, but China is dominant in many areas that impact the Biden administration’s green energy transition, including solar panel and EV battery manufacturing and in the production and processing of critical minerals. In the latter case, President Biden has revoked leases, delayed permits and listed fauna and flora as endangered, keeping the United States from developing a domestic critical mineral mining industry.  So far, China seems to be getting stronger from the efforts taken by the Biden Administration affecting energy and technology.

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