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The United States has banned the export of chips and technologies related to sensitive technologies to China in order to suppress China's development in various cutting-edge technologies. This practice, known as "strangling", has troubled China. However, German experts pointed out that this continuation of the confrontational approach during the Trump era has cost American companies a high price, because China may continue to block the acquisition of American semiconductor companies, and the restrictions imposed by the United States will inevitably stimulate China to build a competitive domestic semiconductor industry, and it is only a matter of time to achieve this goal.
Deutsche Welle quoted an article in Handelsblatt analyzing the failure of large-scale semiconductor industry acquisitions, saying that the US restrictions on chip exports to China have undoubtedly affected China, "but US President Biden should end the confrontational line of his predecessor Trump. Because the price paid by related US industries is too high."
The author of the article, Joachim Hofer, believes that "in the semiconductor competition, China is by no means as powerless as some Washington strategists expect. A failed acquisition can prove this point: Applied Materials, a US semiconductor manufacturing equipment company, recently announced that it would abandon its acquisition of Kokusai Electric for more than US$2 billion. The reason is that it failed to obtain approval from Chinese regulators."
The article pointed out that Japan International Electric is owned by the American investment fund KKR. Although both the buyer and the seller are American companies, they cannot ignore Beijing. Because they are unwilling to give up the huge Chinese market, they decided to give up the acquisition after waiting for two years.
The article predicts that China is likely to continue to block US semiconductor companies' global acquisitions, "especially US chip company Nvidia's plan to acquire British chip design company ARM for $40 billion."
The article goes on to say that the U.S. restrictions on semiconductor exports to China will continue to stimulate it to build its own competitive semiconductor industry. "Although this will take some time, China has already proven its ability to catch up in the fields of solar energy, trains and automobiles."
The article concludes that the United States should therefore engage in dialogue with China as soon as possible. Biden’s top priority is to provide reliable protection for the intellectual property rights of American chip manufacturers. It is not unrealistic for the two sides to reach a consensus agreement on this. After all, China also hopes that large American semiconductor manufacturers will invest in and build modern factories in China. Now American companies choose to bypass China because they are worried about technology spillover. "
*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.
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