How Resources Turned Frontline Weaponry

The US-China battle for supremacy has turned commercial assets into strategic geopolitical instruments

- N Madhavan

Recently, J.D. Vance, the US vice president, confirmed what the world feared. He termed the competition between the US and China in developing artificial intelligence (AI) as an 'arms race'. Policy makers in both the countries believe that whoever wins this race will dominate the world, going forward. At the core of this battle is computing power and this has given a fresh impetus to the chip war that began between the US and China five years ago.

In May 2020, during his first term as the president of the US, Donald Trump fired the first salvo. The US commerce department added Chinese tech giant Huawei Technologies to the 'Entity List', a measure which prevented the company that sells smartphones, telecom equipment and cloud computing services from accessing advanced computer chips produced or developed using US technology or software. The reason? The US feared that Huawei's attractively priced products, backed by Chinese government subsidy, would soon dominate the next generation telecom networks, ending American clout in the field. The move had a debilitating impact on Huawei. Its global expansion took a hit and revenue crashed. "A corporate giant faced technological asphyxiation," Chris Miller, in his book Chip War, wrote.

According to him, this development reminded China of its weakness. "In nearly every step of the process of producing semiconductors, China is staggeringly dependent on foreign technology, almost all of which is controlled by its geopolitical rivals—Taiwan, Japan, South Korea or the US," he wrote. China began investing billions of dollars to develop its own semiconductor technology in a bid to free itself from America's chip choke, he added.