The tariff war raging between the United States and China was the main focus of the meeting between Xi Jinping and Donal Trump at the G20 in Buenos Aires.
This trade war affects traditional economic markets such as automobiles and steel. It also concerns a much more sensitive and vital sector for the future: technology (computer networks, artificial intelligence) and semiconductors.
Supremacy and dependence
Silicon Valley takes its name from Silicon, one of the most important chemical elements that make up electronic chips. The Pentagon strongly supported the California region because one of the first applications of electronic chips emerging from Silicon Valley was the guidance systems for nuclear missiles. These chips are now the foundation of the digital economy and national security. Cars have become rolling computers.
Banks are computers that manage the flow of money. American companies dominate the most advanced sectors of the industry. China, on the other hand, remains dependent on the outside world for its supply of quality electronic chips. And China intends to do the right thing.
The tariff war
Long before Donald Trump started his tariff war, China announced its intention to catch up. In 2014, Beijing announced the creation of an investment fund of one billion yuan (126 billion euros) to improve its national industry. China’s ambitions to create a high-tech industry worried Barack Obama and his administration, a wave of Chinese tenders for semiconductor companies confronted his administration during his last mandate. In particular, Barack Obama prevented Intel from selling some of its most potent chips to China in 2015. Other countries are also concerned, including Taiwan and South Korea, which have regulations in place to stop Chinese purchases of semiconductor companies and to stop the looting of intellectual property.
The limits of the Chinese offensive
Today, America has the advantage over China in the design and manufacture of high-end chips. With this war, the US can probably slow China down, but progress will be difficult to stop.
The attacks will even make China even more determined. Just as the emergence of Silicon Valley was based on the support of the American government, China combines the resources of the state and companies in the pursuit of its objectives. It has set up support and incentive programs to attract engineers from other countries, including Taiwan.
Companies like Huawei have proven their ability to innovate; the blocking of Intel chips in 2015 only encouraged China to develop its domestic supercomputer industry, such as the “Taihu-Light,” which is Chinese made. Also, China’s ambition to become a world power in the semiconductor field comes at the right time.