China pledges retaliation after Taiwan's chip export ban
China and Taiwan's already fragile diplomatic relations face renewed tension, and this time, it's over advanced semiconductor chips.
Two weeks ago, Taiwan's International Trade Administration (ITA) added Huawei and SMIC to its Strategic High-Tech Commodities Entity List, effectively banning exports to two of China's most prominent market players. The two firms were among the 601 new entrants into the list, whose members ITA says are a source of national security concerns or have been involved in arms proliferation.
The list contains states Taiwan considers adversaries, including North Korea, Iran, and Russia, as well as terror groups such as al-Qaeda and Taliban. China has now vowed retaliation against Taiwan.
'We will take forceful measures to resolutely safeguard the normal order of cross-strait economic and trade exchange,' Zhu Fenglian, the spokesperson for the Taiwan Affairs Office, told the media in a briefing this week.
Fenglian described the restrictions as 'despicable' and attributed it to the United States government's influence on Taiwanese President Lai Ching-te.
The U.S. government has long cautioned Taiwan against importing chips to China that could allow the Asian giant to compete with America on the artificial intelligence (AI) front. The American government itself has been cutting Chinese companies off aggressively in recent years from the latest chip technology. Companies like Nvidia (NASDAQ: NVDA), which enjoyed dominance in China, are now missing out on a $50 billion market.
Praising the new restrictions, a select committee on China's Communist Party in the U.S. Congress urged allies to continue working together 'to ensure the CCP's attempts to illegally transfer tech are stopped cold.'
Meanwhile, Fenglian says the ban will hurt Taiwan more than China and that 'it will not delay the progress of industrial upgrading on the mainland.'
Guo Jaikun, a spokesperson for China's Foreign Affairs Ministry, reiterated the country's resolve in a separate media briefing.
'China opposes the US politicizing tech and trade issues, overstretching the concept of national security, abusing export control and long-arm jurisdiction, and maliciously blocking and suppressing China,' he stated.
China's resilience amid U.S. sanctions
Chinese companies have become adept at adapting to new restrictions from the U.S. and its allies over the years. When Huawei was suspended from Google's (NASDAQ: GOOGL) Android system, it responded by rapidly developing its own operating system and has regained most of the lost ground. In AI, Chinese firms have just been as resilient. SMIC, China's largest chipmaker, has weathered American sanctions and continued producing advanced chips at a higher rate than South Korea's Samsung and the Taiwan Semiconductor Manufacturing Company (NASDAQ: TSM).
While Huawei doesn't operate a foundry, it's just as important to China's chip strategy. The company designs the chips and outsources production to SMIC and other chipmakers. Data shows that Huawei has brought Nvidia's market share down from 95% to 50%, and with U.S. restrictions on Nvidia tightening, Huawei is set to become the dominant player.
Even American firms have criticized the government's strategy. Nvidia CEO Jensen Huang said the measures have failed to contain Chinese firms; rather, they have pushed them to innovate faster, and ultimately, they will be better positioned to compete with the U.S.
IBM's quantum computing breakthrough
Elsewhere, American tech giant IBM (NASDAQ: IBM) has announced that it's now developing Quantum Starling, a large-scale fault-tolerant quantum computer that the company says will be the world's first.
Quantum computing has become one of the hottest technologies globally, with dozens of tech giants announcing new projects over the past year. Last December, Google launched a new chip, Willow, that it claimed could reduce errors exponentially. It claimed that a computation that took Willow five minutes would take today's fastest computers 10,000,000,000,000,000,000,000,000 years.
Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) have also announced new quantum chips this year; the former even pledged to launch the world's most advanced quantum computer this year.
IBM's new quantum computer will be built at its facility in Poughkeepsie, New York. The company says it has a roadmap to 2033 and beyond, and that so far, it has delivered on all its targets.
'Based on that past success, we feel confident in our continued progress.'
But while quantum computing receives all the hype and funding—the sector raised $2 billion last year—it's yet to venture outside the research labs, and experts remain divided on the earliest timeline that these super-powerful computers can go mainstream. Nvidia's Huang said in January that it could be over 20 years, while others say it could take even longer.
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