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Not only China, but also South Korea's technology sector will suffer from US sanctions.

Published: 2022-11-21

At the recent Congress of the Communist Party of China, its leader Xi Jinping said that in the next five years, the country should make more efforts to ensure independence and self-sufficiency in high technology. At the same time, the Chinese authorities are ready to assist South Korean companies that have enterprises in China so that they continue to develop in the country. The United States can interfere with this.

This can be judged, according to the Nikkei Asian Review, at least by the content of the conversation of the head of the Communist Party of China in Dalian during a visit to this city by the vice president of SK hynix, which took place at the end of September, when a new round of sanctions from the United States was still did not restrict the supply of specialized equipment to China. As the CCP spokesman explained, SK hynix should expand its cooperation with the party and continue to invest in the Chinese economy without giving up.

SK hynix in Dalian, China, has a flash memory production facility purchased from Intel at the end of 2021 and is building its own. In the city of Wuxi, the company has an enterprise for the production of RAM chips, which forms up to 40% of the entire production program of the brand. From this point of view, the Korean manufacturer is forced to balance between the interests of the Chinese and American sides. However, speaking specifically about the October wave of sanctions, SK hynix, together with Samsung, managed to delay the introduction of US export restrictions for a year. However, a diplomatic source for the Nikkei Asian Review noted, "South Korean chipmakers will face hardship if China pursues them."

According to the results of the current year, the Chinese industry will provide itself with the necessary semiconductor components by only 26%. This is noticeably higher than the 16% observed in 2015, but still too low to declare independence from foreign suppliers. The activity of the PRC in the field of innovation is characterized by at least the number of patent applications filed annually. The year before last, the country filed 30,130 patent applications in semiconductors, almost four times more than South Korea, ranked second in the world, with 7,749 applications. Last year, China published more than twice as many scientific papers in the field of semiconductors than the United States: 7379 pieces against 3114.

Taiwan in this respect still feels its technological superiority in the field of lithography, as can be judged from the quoted statements of the founder of TSMC Morris Chang. The Taiwanese company will be the first to produce advanced 3nm components in the United States if it manages to overtake Intel, which expects to master the production of components using 18A technology in Ohio by the middle of the decade. To do this, in Arizona, TSMC intends to build a second facility next to the one already under construction, which will master the production of 5-nm products from 2024.

Morris Chan admitted that many people are jealous of Taiwan's superiority in chip manufacturing. The founder of TSMC is often asked if it is possible to build a core business in a particular country. The authors of such initiatives are aimed at earning or strengthening national security, according to the former head of TSMC. From which countries such requests are received, he did not specify.

Beijing shows no signs of curbing its technological ambitions, while Washington appears to be just as determined to contain those ambitions. For South Korea and Taiwan, the fight for technology and talent may be far from over.