• Gregory Allen is the director of the AI Governance Project and senior fellow in the Strategic Technologies Program at the Center for Strategic and International Studies (CSIS).
• CSIS is a research institution and think tank that provides analysis of public policy issues and works to improve the quality of the public policy debate.
• The defense industry and the commercial technology industry have undergone a multi-decade divorce, with the majority of defense spending now going towards specialists whose primary customer is the U.S. national security community.
• There are disadvantages to this structure, as the defense bureaucracy is not well-suited to developing disruptive technologies that could potentially put the U.S. at a strategic disadvantage.
• The early success of Silicon Valley was largely due to government funding, but the visionaries of the time recognized that the story would end in mass commercial adoption.
• The globalization of semiconductors was a conscious policy decision made by the U.S. to strengthen Japan’s economy and technology industry, and it was largely successful.
• We are now at an inflection point where the current policy towards China is out of gas, and a new policy must be developed.
• The U.S. and China have had a long and complicated relationship, with the U.S. attempting to integrate China into the global economy in the 1990s.
• The U.S. and China have had a strained national security relationship since the Taiwan Strait Crisis in 1997.
• The U.S. Chamber of Commerce began to express concern over China’s Made in China 2025 policy, which sought to replace Western joint venture partners in China.
• This lack of guardrails on the relationship between the U.S. and China has led to a breakdown in diplomatic relations and an increase in tensions.
• The path from the 2015 Made in China 2025 response to the 2022 chip ban announcement was marked by a shift in U.S.-China trade policy, a realization of Chinese technological sophistication, and a hostile Chinese national security posture.
• Donald Trump’s election and his focus on tariffs further shifted the Overton window, and the U.S. government’s punishment of ZTE for violating Iran sanctions revealed the power of export controls as a strategic tool.
• This led to a shift in Chinese national security policy, with a focus on self-reliance in the semiconductor industry and an understanding that their tech giants were vulnerable to U.S. sanctions.
• China has been pushing for self-sufficiency in semiconductor technology for some time, but the ZTE incident in 2018 caused a step change in the conversation.
• The U.S. has implemented export controls to limit China’s access to cutting-edge semiconductor technology, but this is a risky move as it could lead to the U.S. being isolated from the global semiconductor industry.
• The U.S. is relying on its allies to back its export controls, and China is hoping that the Netherlands and Japan will be persuaded to betray the U.S. and provide China with the technology it needs.
• Germany is the most challenging ally to get on board, as it has the most sophisticated semiconductor technology and could provide China with the essential components it needs.
• The Biden administration’s October 2020 export control policy is a major reversal of 25 years of U.S. government policy on trade in technology towards China.
• The policy is designed to restrict the sale of advanced AI chips and semiconductor manufacturing equipment to China, and to degrade the status quo of technology in China.
• The policy is a response to China’s civil-military fusion and is designed to prevent the Chinese military from accessing advanced AI technology.
• Secretary of State Anthony Blinken has described the policy as being at an “inflection point” in the post-Cold War world, and the policy could potentially lead to a new Cold War between the U.S. and China.
• The US government has recently implemented a ban on the export of semiconductor chips to China, in an effort to prevent the Chinese military from gaining access to advanced technology.
• The ban is enforced by the Department of Commerce, which uses lists of prohibited entities and technologies to identify and prevent illegal exports.
• The ban is designed to prevent China from accessing the latest technology, but it also creates incentives for China to attempt to evade the export controls.
• The consolidation of the semiconductor industry has made it easier to enforce the ban, as there are fewer companies to monitor and fewer technologies to track.
Published December 15, 2022. Visit Stratechery to read Ben Thompson’s original post