The Challenge with China in Government
It’s no secret that the US and China have been at each others throats for years now, but while the US has been trying to limit China's capabilities, China has been fighting back with its attempts to become independent on technology. For example, China’s growing investment into silicon technologies, its desire to obtain the latest EUV systems from ASML, and the drive towards RISC-V all show this strong desire for semiconductor independence.
However, one key piece of evidence in this ability to be independent came when China rejected NVIDIAs latest H200 chips in favour of home-grown solutions. Considering that NVIDIA is at the absolute bleeding edge of technology, this is a major red flag that China could be close to unlocking true semiconductor independence.
Now while many are concerned with China's capabilities, there is another dimension to this problem that continues to have many worried, and that is the presence of Chinese made hardware inside Western systems, specifically, those used in government.
Why?
If these chips have potential backdoor access, it would give China an extreme advantage in spying, espionage, and cyberattacks, something that the US is desperate to avoid.
Considering that China is looking to move on Taiwan in the coming years, it would make sense for China to inflict damage pre-emptively against the US, and having access to servers holding sensitive information could be invaluable in its own right.
Regardless, Chinese chips at federal government levels is a growing danger to US stability, and something needs to be done about it.
But what exactly can be done?
US announces plan to prevent Chinese chips in federal government
New plans from the US will exclude Chinese semiconductors from its government procurement network starting late next year, with the move aimed at preventing companies from considering Chinese semiconductor imports due to the recent memory chip shortages and price hikes.
The Federal Acquisition Regulatory Council (FAR Council) announced that semiconductors from Chinese companies including SMIC, CXMT, and YMTC will be banned from government procurement, citing national security concerns. The rule, effective from December 23 of next year, will exclude Chinese semiconductors from the US federal supply chain, with the move coming after a recent report revealed that Chinese-made memory modules were being used in federal systems.
The new rule aims to prevent manufacturers from using Chinese-made semiconductors, and the rule will also apply to finished products that contain Chinese-made semiconductors. The rule exempts micro-purchases under $15,000, but the FAR Council noted that even mass-market finished products could be affected, including smartphones, computers, and vehicles.
Analysts believe that the move is designed to prevent companies from purchasing Chinese-made parts, especially memory chips, as a result of the ongoing semiconductor shortages and rising prices. The decision to specifically target memory chips comes as the US looks to prevent Chinese-made memory modules from being used in critical applications such as servers, supercomputers, and defence systems.
This move also benefits companies such as Samsung Electronics and SK Hynix, both of which are based in South Korea, which are considered US allies. The decision could create commercial opportunities for these firms; Samsung has won contracts to supply servers to some U.S. agencies.
Is this move the right one?
There is no doubt that having Chinese parts in Western governments is a bad idea, but it depends on what those parts are, and how capable they are. For example, logic devices, analog components etc. are unlikely to do any harm as they lack digital processing capabilities. However, devices such as processors, controllers, and SoCs are of particular interest as they are often the core of a system, and it is these devices that pose a serious threat.
It is also important to note that the Chinese ability to manufacture PCBs is arguably more dangerous than manufacturing the actual component itself. This is because PCB manufacturing can easily be done at local facilities where engineers can silently integrate additional chips or even backdoors that would go unnoticed in standard testing procedures.
Furthermore, the current state of electronics is dire, and the recent supply chain issues caused by COVID, the war in Ukraine, and other supply disruptions are causing massive issues for engineers. To make matters worse, major western companies haven’t exactly been helpful in this field, often shifting focus on the most profitable areas of industry such as the growing AI bubble.
If China continues to provide solutions for engineers, then it will continue to become a more desirable source of parts. So, if the US really wants to cut dependency on Chinese parts, then it should first look at stabilising supply chains in the west, instead of making random arbitrary rules that are clearly hindering engineering progress.
