The price of the chip wars

Hello, it’s Debby in Taipei. The US is escalating a chip war against China. But first...Three things you need to know today:• China restrict [View in browser]( [Bloomberg]( Hello, it’s Debby in Taipei. The US is escalating a chip war against China. But first... Three things you need to know today: • China restricted [exports of chipmaking metals]( • Multiple lawsuits accused Twitter of [ducking layoff fights]( • Rivian surged after quarterly production [beat expectations]( A US chip crusade Washington has over the past year landed several decisive blows against Beijing in its fight to suppress China’s technology ambitions. After banning [Nvidia Corp.’s](bbg://securities/NVDA%20US%20Equity) most powerful artificial intelligence chips from Chinese firms and striking agreements with Japan and the Netherlands to also withhold advanced gear, I thought Washington was done. I was wrong. It’s becoming clear the Biden administration is turning the heat up several more notches, regardless of any [retaliatory measures]( China may threaten or adopt.  Again and again, I think back to US National Security Advisor Jake Sullivan’s comments last September that the US intends to keep [“as large of a lead as possible”]( when it comes to certain technologies, including semiconductors. Consider: US officials could [ban]( even more of Nvidia’s AI chips for China after barring its top-of-the-line A100. Washington is reportedly looking to [restrict]( US firms from leasing cloud services with AI capabilities to Chinese companies. And it’s looking to expand a blockade on the sale of machines made by ASML Holding NV, which are indispensable to advanced semiconductor manufacture. It’s true Washington seems keen to improve relations with Beijing, dispatching a flurry of officials including State Secretary Anthony Blinken and Treasury Secretary Janet Yellen to the capital. Officials have been careful to emphasize [“de-risking”](rather than “decoupling” from the country. Yet it seems the administration is moving on a parallel track when it comes to the guidelines Sullivan articulated with such simplicity about 10 months ago. In doing so, it’s putting some of its biggest corporations in difficult positions: Amazon, Microsoft, Nvidia. In particular, what’s surprising about the US move to limit ASML is that it seems to be playing hardball with the Netherlands, a key ally that’s made concessions by joining a US-led global chip blockade against China. Biden officials seem to have taken a leaf out of the playbook of their Trump-era predecessors, trying once again to achieve broad aims through unilateral measures. They’re trying to invoke a rule that stops foreign equipment suppliers providing to China any gear that contains even a modicum of American components, Reuters [reported]( last week. That sort of extra-territorial reach has proven effective in the past, perhaps most demonstrably when the Trump administration kneecapped Huawei Technologies Co. by similarly banning chipmakers using any US tech from supplying parts to the Chinese telecom gear maker without a license (through the rather esoteric [Foreign-Direct Product Rules](). But is the Biden administration at risk of undermining its own efforts to distance itself from the unilateralism of the Trump years? The White House has no doubt tried to pressure and cajole allies into its worldview, but it attempted diplomacy before heavy-handed decree. Its latest actions on the chip front risks alienating countries it depends on in its over-arching ambition to contain China's economic ascent. For some, it’s hard to see how the chip wars can get any fiercer — but it could. The curbs haven’t targeted China’s capability to make mature or lower-end chips, and South Korea is so far somewhat non-committal toward joining Washington’s undertaking. My gut tells me we’ve yet to see the final salvo in this battle.—[Debby Wu](mailto:dwu278@bloomberg.net) The big story Video footage of the riots in France were hugely popular on social media as unrest spread throughout the country, leading French President Emmanuel Macron to blame TikTok, Snapchat and other apps for [fueling violence](. Get fully charged Adobe’s $20 billion takeover of design software company Figma faces a merger review by European Union officials as global regulators [scrutinize record-breaking deals in the digital economy](. As China clamps down on exports of two obscure yet crucial metals in an escalation of the trade war on technology with the US and Europe, you might ask: What exactly are [gallium and germanium](? Apple is slashing production targets for its Vision Pro headset because manufacturers are [struggling with the novel gadget’s complex design](, the Financial Times reported. 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