US Announces Export Bans on Modern Semiconductor Technologies

Recently, the US government announced a wave of new export bans that prevent foreign nations (i.e. China) from developing state-of-the-art semiconductors. What exactly does the ban include, how will these hinder China's attempts, and is there any real benefit to the export bans?

New export bans for semiconductor technologies

Since the COVID pandemic of 2020, countries around the world have come to recognise the importance of semiconductors in everyday life and the horrifying truth that the most important semiconductors are made in a few countries that are in close proximity to China. While this may not be any cause for concern for small countries or those that closely align with China, for the vast majority of the West, this is a serious security issue that must be solved as soon as possible.

In response to the security challenges faced by the semiconductor company, the US has recently signed the CHIPS act into law which provides funding and tax benefits for semiconductor foundries in the US. The idea behind the CHIPS act is to encourage semiconductor manufacturers from all over the world to establish foundries in the US while also encouraging western manufacturers to use western-made semiconductors. 

But increasing tensions between China and the US have now led to a new wave of export bans on key semiconductor technologies by the US. Even though the export ban doesn't specifically mention China, there is no doubt that the ban targets China, especially after new revelations that China has achieved 7nm devices (something analysts thought wasn't currently possible). 

The new export bans target ultrawide bandgap semiconductors, including gallium oxide and diamond, and CAD software designed for utilising gate all around FETs (GAAFET), both of which have been identified as key technologies needed for the development of advanced military systems.  

The export ban on ultrawide bandgap semiconductors limits the development of high-power electronics commonly found in advanced power management systems, electric vehicles, and RF amplifiers, while the export ban on software technologies needed to design GAAFETs hinders the development of the latest processors that require GAAFETs when going beyond 7nm.

How will the ban hinder China's technological development?

Currently, China is not working on ultrawide bandgap semiconductors, nor is it developing technologies smaller than 7nm, which means that the export bans will have little effect on China in the short run. However, the next few years will see China significantly fall behind if it cannot access technology smaller than 7nm, as the method currently being used to create 7nm devices by SMIC is highly inefficient (if SMIC wants to go smaller than 7nm then it needs to work towards EUV which took the west some two decades to achieve). The same is true for ultrawide bandgap semiconductors that are well known for their high-efficiency power switching (something that will be important in future EVs and other renewable systems). At the same time, ultrawide bandgap semiconductors will also play a key role in RF technologies, including cellular and defence.

Thus, if the bans are effective against China, then there are three possible outcomes. The first is that China does nothing and accepts that it will always be technologically behind the US. So long as China maintains a strong military and doesn't kick the hornet's nest, the US will keep its distance, with both sides prospering in the long run.

The second option is that China embraces the US and its allies, which would likely see easier access to critical technologies. Such an option would show the US that China has no intention of war of any kind and simply wants to go about its own business. In this scenario, the US is likely to turn a blind eye to internal affairs in China while forming strong economic ties.

The third option is that China rejects the west and tries to become more isolationist. Increasing threats against Taiwan could see major global instability until the west has secured its semiconductor supply chains. The day Taiwan becomes redundant, China would likely seize the opportunity to take back the island nation while the US ignores the invasion as it no longer poses a threat. However, such an invasion would not see any economic gain from China, as foundries in Taiwan would likely be sabotaged or just rendered inoperable due to the collapse of complex supply chains and a lack of understanding of the proper operation of the foundries.

Is there any real benefit to the bans?

While the bans are aimed at limiting the capabilities of China, one has to ask if they are worth it. China's military strength is impressive, but it's untested and has no experience whatsoever (compared to the US, which has been actively involved with wars since the US was founded). What China does have enormous amounts of experience in is industrial espionage, cyber warfare, AI development, and mass surveillance.

As such, it might be a better idea for the west to rethink its export bans and instead start implementing import bans on electrical goods from China. For example, billions of IoT devices leave Chinese factories every year and find themselves in all corners of the globe. It is possible that spyware installed by government officials during manufacturing could provide Chinese intelligence agencies with a global surveillance network. In fact, this threat is real enough that the US and UK had to bring in bans on Huawei cellular equipment as it would potentially give the Chinese government a potential backdoor into critical infrastructure.

Overall, the bans could help prevent China from developing advanced military technologies, but how effective they will be and how long they will last is entirely unknown.