On December 23rd, the Office of the US Trade Representative announced that it had launched a 301 investigation against the chip industry in China. The target of this survey is mainly the mature process chips in China.
In the past few years, we have the impression that the United States is more concerned about advanced process chips. The United States has done the same. From products to technology and manufacturing equipment, every time the United States introduces trade restrictions, it is restricting China from acquiring advanced process chips from different dimensions.
But now, America’s goal has changed.
How to understand such a change?
This time, there are many clues about the changes in the United States in the official notice of the United States launching the 301 investigation.
In the notice, the Office of the U.S. Trade Representative mentioned that it would investigate whether there is overcapacity in China’s chips and the dependence of downstream industries in the United States on China caused by these chips.
The reason why these investigation directions are related to the specific problems that the United States is worried about.
Recently, the U.S. government completed a study, and according to the research results, two-thirds of American products use mature process chips from China.
For this phenomenon of "dependence" on China chips, the US government has a great anxiety.
In the eyes of the US government, the development of China’s chip enterprises not only means that the market share and jobs of American chip enterprises have been "robbed", but also means that China has more chips and "threatens" the safety of the American industrial chain.
Therefore, according to the "investigation results", the United States will decide whether to impose tariffs or introduce other measures to prevent China chips from entering the US market.
In this way, many people can feel that the American rhetoric is already a cliche — — From the relatively elementary manufacturing industries such as chemicals and textiles in previous years to the electric vehicles in recent two years, as long as China has established an advantage in the global market, the United States has initiated investigations and imposed tariffs on the grounds of "disrupting market order at low prices" and "threatening American economic security".
However, after inquiring about the data of China’s export of chips to the United States, Mr. Tan found that things were not so simple.
△ Since the export data of December this year has not been released, the statistics have selected the data of the same period in the past ten years.
It can be seen that China’s exports of chips to the United States have not changed much in the past three years. In other words, "the United States relies on China’s mature process chips" is not a new phenomenon this year, which is not the time when the United States launched an investigation.
And the timeline goes back to 2022 — — At the end of this year, China’s chip exports to the United States gradually stabilized at today’s level. Taking 2022 as the coordinate, and then combing how the United States has discussed mature process chips in these years, we will find that,What really promoted the 301 survey is that the cognition of mature process chips in the United States has changed.
American media, American think tanks and American government were selected as the statistical objects. In 2022, there was little discussion about "China mature process chips". This year, Biden’s export control measures have just been introduced, which are full of restrictions on China’s advanced manufacturing processes. Americans also have their own hot spots to catch up with.
By the end of 2022, China’s chip exports to the United States have increased by more than 60%, reaching the biggest increase in the past decade. At this time, a different voice appeared.
At the beginning of 2023, an American think tank published an article pointing out that the focus of the US government was biased, and they ignored the importance of mature process chips.
Tan Zhu noticed that this article pointed out a key problem: it is misleading to divide chips into "advanced process" and "mature process".
Unlike many people’s first reaction, "mature process chips" do not use outdated technologies, including new technologies such as silicon carbide, which are all used in mature process chips. At the same time, such chips will be continuously improved to meet new requirements and applications.Therefore, traditional chips are destined to maintain a high degree of correlation with emerging industries and technologies for a long time.
Tracing back to the source, the term "mature process chip" was originally a military term. In order to promote the development of military technology, the United States made a distinction between "advanced process chip" and "mature process chip". This distinction has nothing to do with industrial logic.
The importance of this article lies in the fact that this cognitive rectification has had an effective impact on the US government:
｜｜In January this year, the US-China Special Committee on Strategic Competition of the US House of Representatives sent a letter to the US Department of Commerce and the Office of the US Trade Representative, requesting to launch an investigation into mature process chips in China. This is the starting point of the investigation.
｜｜Soon, the US Department of Commerce responded first. This year, the U.S. Department of Commerce launched a research on the basis of the U.S. semiconductor industry. This study draws the conclusion that the United States "depends" on China’s mature process chips through statistics.
｜｜Based on the evidence provided by the US-China Special Committee on Strategic Competition and the data studied by the US Department of Commerce, the Office of the US Trade Representative finally decided to launch the 301 investigation.
Initially, the US-China Special Committee on Strategic Competition paid attention to the progress of mature process chips in China, largely because it saw this article.
In their letters asking the US government to launch an investigation on mature process chips in China, a large number of opinions and data of this article appeared.
△ Letter from the "US-China Special Committee on Strategic Competition" requesting an investigation on mature process chips in China.
In other words, this 301 survey reflects that the cognition of the relationship between industrial competition and technological progress in the United States is changing. This also makes this 301 survey more symbolic than before.
Cao Yun (Former practitioners of chip enterprises in China）：
● From the perspective of our industry, technological innovation will be divided into different links to discuss. Now, the improvement of chip production process is the most important, not the innovation of the source.
● The improvement of chip production process is divided into process node improvement, material improvement, yield improvement and detail optimization. As mentioned above, using silicon carbide on mature process chips belongs to material improvement.
China has a unique advantage that it has the most comprehensive manufacturing category in the world, which means that we can promote innovation in all processes and links of the chip industry chain.
From this point of view, it is unrealistic for the United States to try to block the development of advanced process chips in China and then suppress the whole chip industry in China.
Now, the United States is beginning to understand that simply blocking other countries’ access to advanced technology and products in areas where it has technological advantages cannot maintain its advantages for a long time.
From this "reflection", we can also better understand the objective law of the development of the chip industry.
You can look at such a set of data.
In 2024, the US chip market is expected to grow by 23.7% year-on-year. But there are two important driving forces behind this data:
In 2024, the global chip market is picking up, and it is expected to increase by 20.7% year-on-year. At the same time, NVIDIA’s revenue in 2024 is expected to increase by over 100% year-on-year, becoming the biggest driving force for the growth of the US chip market.
But it also means that most chip companies behind it are "dragging their feet".
Master Tan counted the top ten chip companies in the United States except NVIDIA, and found that 80% of them had a revenue growth rate far lower than that of the global chip market this fiscal year. Even, five companies are expected to have negative growth this year.
By combing the chip policy of the U.S. government in the past four years, we can see that the thinking of the United States is basically "two-legged": subsidizing American enterprises through the Chip and Science Act, and restricting the export of advanced technologies to curb the development of China enterprises.
After four years, obviously, the result is not ideal.
US Commerce Secretary Raymond recently said: It is futile to try to contain China. But there is still a half sentence that she failed to say. At the same time, the US government’s assistance policy was not successful. These two factors have jointly caused the dilemma of American chip companies today.
The Chip and Science Act was signed in August 2022, but it was not until the end of 2023 that the US government approved the first subsidy. According to relevant disclosures, as many as 40% of large-scale projects have been postponed or stopped indefinitely because of the ineffective promotion of the Chip and Science Law and the Inflation Reduction Law.
Not only can the US government not help American companies, but more importantly, this year was originally a year of recovery in the global chip market, and many chip companies are expecting a rebound in profits. However, the "chip method" has become an obstacle to this vision — — The "chip law" has set up protectionist provisions, and accepting subsidies from the United States means giving up markets in other countries.
The choice of market is a particularly important issue this year.
Professionals told Tan Zhu that a large number of chip companies were pushed to set up factories in the United States through huge subsidies and political pressure, resulting in industrial transfer under non-market conditions, which would lead to increased costs. According to estimates, the cost of opening a new chip factory in the United States is about 30% to 50% higher than that in Asia, which will be shared among chips produced in the United States in the future.
In the long run, perhaps the profits of these factories in the future can make up for these costs. But for many companies, they don’t have the luxury to think about the market in 10 years.
In the past three years, every year, the global chip market has a new atmosphere:
｜｜From 2022 to 2023, the phenomenon of "hoarding goods" first appeared in the global chip market, which promoted enterprises to expand production, and then there was the problem of oversupply.
｜｜In 2024, the focus of the global chip market shifted from the previous CPU chip to the GPU chip driven by artificial intelligence.
When the wind is high and the waves are urgent, should we choose the mature industrial chain that has been verified in the global chip market, or choose the illusory idea of the US government to build a new industrial chain?
Professionals told Tan that the United States interfered with the balance of supply and demand of global chips, and trade disputes would follow. For enterprises, these are risks.
The more global scientific and technological innovations emerge and new development opportunities emerge, choosing unknown risks is essentially giving up development opportunities.
In other words, the act of reshaping the global chip industry chain has not made the United States more "safe" as the US government said, but has destroyed the market environment on which American enterprises depend for survival and growth.
Master Tan once discussed a question with chris miller, the author of Chip Wars. What was the final result of American intervention in the global chip industry chain?
Chris miller (American historian, author of Chip Wars.）：
● The most likely situation is that there are more and more "separated" supply chains, which eventually produce completely independent or parallel supply chains. At present, this trend has appeared.
● An obvious impact is that this will lead to inefficiency, and countries will spend a lot of manpower, financial resources and time on the same research. The cost is huge, and the sacrifice of the chip industry is also huge. You know, we could have made progress together and accelerated the development of technology.
The peak of human wisdom should have been used to explore the sea of stars. It would be a pity if it was consumed in meaningless competition for the sake of zero-sum game.
Not to mention, the way of competition chosen by the United States has been proved to be the wrong way.
From 2018 to 2021, American importers paid nearly $123 billion to cover the increased tariff costs. According to the report of the American Chamber of Commerce, if the tariff rate of 25% of the previous administration is continued, the United States will lose $190 billion annually by 2025 and $250 billion annually by 2030, which will make the United States lose nearly $1 trillion in economic growth potential.
According to the United States’ own forecast data, by 2029, China will further expand its global market share, accounting for about 50% of the global market for mature process chips.
On this basis, the chip will also be related to the normal operation of key industries such as communications, enterprises, electronic equipment and industrial manufacturing in the United States.
If the United States imposes tariffs on China chips, it will surely bring huge losses to itself.
Not to mention, this time, 301 survey is used, which points to unfair trade in global trade. Professionals told Tan Zhu that in the global chip industry, the United States has the largest subsidy, and the United States is the biggest unfair manufacturer.
What the U.S. economy really needs is not to think hard about what kind of China products to suppress, but more importantly, to completely jump out of this thinking and help American enterprises return to the wave of free flow of global trade to find opportunities for growth.
For any American government, this is the truth they need to see.
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