When the US banned China from participating in NASA projects, China built its own. When the US banned China from participating in the “international” space station, China built its own. When the US stopped China from participating in Europe’s GPS project, China built its own. When the US blocked Israel’s sale of AWACs to China, China built its own. When Trump imposed tariffs on Chinese products to reduce US the trade deficit, it went up. When Biden imposed sanctions on Xinjiang products, US imports from Xinjiang went up. When the US and its vassals imposed sanctions o kill Russia’s ruble, the ruble went up. When the US strove to maintain dollar hegemony by threats, sanctions, and attacks, more countries decoupled from the dollar. What do you think will be the result of the US banning the sale of semiconductor technologies to China? – Peter Man.
As electricity displaces internal combustion in cars, photonic chips are displacing electronic chips in circuits. The switchover will accelerate when Sintone, a Beijing startup, opens the world’s first photonic chip foundry next year, neatly filling the high end chip gap created by US embargoes.
Technological implications
In an electronic integrated circuit, electron flux passes through electrical components like resistors, inductors, transistors, and capacitors. In a photonic integrated circuit, PIC, photons of light pass through optical components like waveguides, lasers, polarizers, and phase shifters.
PICs are far superior to electronic chips in speed, integration, heat generation, miniaturization, compatibility with existing mass manufacturing processes and cost, being produced entirely with Chinese equipment and IP.
Market implications
China is already the world’s largest market for PICs, expanding from $800 million in 2017 to $2 billion today. PICs increase bandwidth and data transfer speeds and reduce energy consumption in data centers, cutting cooling costs.
PICs make lab-on-a-chip (LOC) practicable, putting laboratories into doctors’ hands. Amazec Photonics markets a sensor with photonic chips which enables high-resolution temperature sensing, so doctors can measure cardiac output and circulating blood volume from outside the body. EFI’s ‘OptiGrip’ offers greater control over tissue feeling for minimal invasive surgery.
PICs facilitate communication between vehicles and urban infrastructure to improve driver safety, and can detect quantities of pressure, temperature, vibration, acceleration, and mechanical strain. PhotonFirst uses PICs to measure shape changes in airplanes, EV battery temperature, and infrastructure strain.
PICs can measure variables beyond the range of our senses, detecting disease, ripeness and nutrients in fruit and helping farmers determine soil quality, plant growth, and CO2. MantiSpectra’s infrared sensor fits into a smartphone and analyzes chemical compounds in plastics.
Financial implications
While US hawks insist the collateral damage is worth bearing, the sweeping expansion of US export restrictions, intended to isolate China, risks decimating US firms.
Nvidia, unable to sell its advanced AI chips to China, saw its market capitalization fall by $38 billion. AMD’s fell $16.5 billion. The combined market value of Applied Materials, Lam Research and KLA Corp, US makers of electronic semiconductor equipment – has fallen $25 billion since the bans were announced. Synopsys and Cadence, US designers of electronic design automation software, are now worth $9 billion less.
Geopolitical implications
After President Xi’s 2015 warning about dependence on foreign technology, Beijing invested billions to leapfrog existing IP, including overcoming PIC manufacturing challenges. If the new fab opens on time and the chips perform as expected, it will further reduce the value of American IP (and the geopolitical value of TSMC) and turn the embargoes into a trillion-dollar catastrophe, like Ukraine.
The specific condition for US success is that the target of export controls must have a sufficiently weak political will to abandon its intention to develop the industry in question immediately … However, China has both the will and an unmatched capacity for industrial policymaking to drive and guide the development of its own alternative technologies. Chinese companies and industries have long since begun the production of related products but are currently in the uncomfortable position of being constrained by the superior and more mature products of US companies. The subtlety of US bans is that it is the US government, rather than the Chinese government, that has helped these companies to achieve the effective exclusion of their competitors from the Chinese market which will, allow Chinese companies, in the medium-to-long term, to grow even faster and invest even more in R&D. Shen Yi (沈逸) and Mo Fei (莫非), Fudan University.
Future Implications
SCMP: Shenzhen International Quantum Academy has set up an Integrated Circuits and Electronics Centre, with advances in key components a top priority. Focusing on IC design, radio frequency and microwave device development and issues crucial to the advancement of quantum computing technologies, the centre team of cross-disciplinary researchers plan to build a lab dedicated to IC design and cryoelectronics.
