The Joe Biden administration is mulling harsh restrictive measures on Tokyo Electron, ASML and other chipmaking and chip equipment manufacturing companies of US allies if they continue to trade with China. In trying to coerce them to be a collective pressure point on China, the Joe Biden administration is creating a self-made dilemma for the United States.
On the one hand, most US semiconductor companies are opposed to the Biden administration’s de facto chip embargo against their largest chip market, believing that the policy is counterproductive and undermines the interests of US business. On the other hand, with Biden facing tremendous difficulties in his bid for reelection as US president in November, more and more US allies feel they needn’t serve in the ranks for the Biden administration’s “chip war” against China anymore.
Even if Biden tries to resort to extreme pressure to reinforce his anti-China Maginot Line, in which he took great pride as he said during the NATO Summit in Washington last week, that fortification is becoming increasingly shaky and porous.
The ASML’s sales revenue from China accounted for about half of its global total in the first half of this year. And for three quarters in a row, as of the second quarter of this year, at least 50 percent of the chip manufacturing equipment made in Japan has been exported to China.
Most of those conscripted by his administration know that Biden’s “chip war” against China, which violates market law and leaves no party unscathed, was nothing but a personal vanity project from day one.
The tumbling share prices of relevant Japanese and Dutch companies on Wednesday following the Biden administration’s latest threats — Tokyo Electron’s share price dropped by 8.3 percent at one point — means that even before the US’ restrictive measures against them materialize, they have started paying for being dragooned into the US’ tech offensive against China.
The Biden administration’s “chip war” is not sustainable. It is like trying to hold back the tide.
The latest forecast by the Semiconductor Industry Association of the United States predicts that global chip manufacturing equipment sales will grow by 3.4 percent this year to $109 billion.
Among them, equipment shipments to the Chinese mainland market are expected to exceed $35 billion, accounting for more than 30 percent of the total, making it the largest market driving demand growth.
All signs indicate that, as the halo of its “value diplomacy” is fading as a result of its “of value only to the US” trade strategies, the Biden administration is increasingly treating the high-tech companies of the US’ allies the same way it deals with their Chinese counterparts. Its efforts to unite its allies to form a united front in a “chip war” against China are therefore doomed to failure.
Reportedly, a group of heavyweight US executives led by US-China Business Council President Craig Allen and CEO and board chair of FedEx Corporation Raj Subramaniam will head to Beijing soon, hoping to meet with Chinese officials to obtain first-hand insights following the conclusion of the four-day meeting of China’s leading decision-makers on Thursday. With no more than four months to go before the election, entrepreneurs in the US and its allies have already started voting with their feet.
