China's semiconductor market is increasingly being blocked from US and Western companies. Image: iStock

The Sino-US semiconductor war just got a little more interesting, with big news from China’s industrial chip overlords.

According to a report in the South China Morning Post and carried by Russia’s Sputnik news service, experts from China’s public and private sector are joining forces to standardize the mainland semiconductor market to protect national supply chain lines in the ongoing US trade war on China.

Ninety members have been established in the committee, including Huawei Technologies, Shanghai-based chipmaker SMIC, Huawei’s semiconductor wing, HiSilicon, as well as tech giants Tencent Holding, Xiaomi and Alibaba Group Holdings, among others.

The China Electronics Standardization Institute (CESI) proposed the plans, which would “support and guarantee the healthy development of the integrated circuit industry,” a Chinese Ministry of Industry and Information Technology (MIIT) statement read as quoted by the SCMP, adding public consultations on the proposal would conclude at the end of February.

China’s rapid progress in IC technologies had surpassed standardisation frameworks in chip designs, packaging, testing and other benchmarks as set by the International Electrotechnical Commission in recent years, CESI added.

According to CESI, a lack of standards causes difficulties to keeping “an orderly industrial environment” due to rising communication costs between semiconductor firms and customers, SCMP reported.

The efforts come days after a top Communist Party official wrote China has vowed to adopt a “whole country” approach to decoupling from foreign technologies despite challenges from a technological gap and foreign sanctions in the trade war.

The announcement came months after China pledged a massive US$1.4 trillion to build its mainland technologies, including infrastructure, artificial intelligence, 5G, green energy and numerous others, in a bid to reduce dependence on key foreign imports, SCMP reported.

US president Joe Biden later postponed an executive order launched in November to May 27 to review Trump’s trade war on China, which blacklisted Chinese firms in recent years, citing alleged ties to the Communist Party and military, sending bilateral ties to historic lows.

SEMI, a major association of global chipmakers, including Samsung Electronics, Intel, Micron Technologies and others, urged the US president in an open letter to reassess the export restrictions on Chinese firms from Trump’s administration, SCMP reported.

The letter called on Biden’s team to review restrictions on Huawei Technologies, SMIC and other Chinese firms and prioritise backlogged trade licences or risk damaging US innovation and subjecting firms to retaliatory measures from Beijing.

The trade group known as SEMI, pointed out that while sanctions are a “powerful national security tool,” they unfairly hurt American companies because Chinese buyers can often find alternate suppliers in other countries, Caixin Global reported.

“Over time, unilateral controls will stifle innovation in the US by reducing the financial resources U.S. exporters need to perform R&D and maintain our technological competitiveness and/or by forcing companies to shift production and R&D outside the United States,” SEMI said.

Observers said Biden could well rethink the sanctions, despite a “Trumpist hangover.”

In some areas, particularly for chips, Biden could well switch gears and lower many of the Trump-era prohibitions in favor of a strategy of a “managed form of interdependence,” said Steven Weber, a political science professor at the UC Berkeley, Caixin Global reported.

But Gartner chip analyst Sheng Linghai said any overhaul won’t come quickly, since the mood in the US remains Trumpist and Biden is also likely to first focus on other issues.

Will a Biden administration change the dynamic? The chip industry is counting on it, and China hopes so too, reported.

In a recent address to the US-China Business Council, China’s foreign minister Wang Yi said China is open to and hoping for a renewed relationship.

“We should strive to restart the dialogue, get back to the right track, and rebuild mutual trust in the next phase of Sino-US relations,” he said.

Trump’s “America First” administration — which earned a reputation for leaving foreign relations with other nations in tatters — added more than 70 Chinese tech firms to an Entity List in May 2019, citing national security risks, sparking criticism from Chinese companies and officials who denied the allegations, SCMP reported.

Further restrictions were also slapped on mainland tech companies weeks ahead of Trump being voted out of office.

Source: Sputnik, South China Morning Post, Caixin Global,