Since the trade dispute, US sanctions against China’s semiconductor sector have intensified, which has also raised concerns about future chip prices and supply. Recently, some financial and foreign policy analysts warned that the cost of chips will increase in the next few years due to US sanctions on Chinese chip technology. However, it is unclear how much the cost will increase over the next 5 to 10 years.
The Financial Times also recently wrote an article for discussion, in which we can see that in fact, the Biden administration’s trade officials, major chip designers and manufacturers’ CEOs and other relevant parties are actually thinking about this topic.
The “chip divide” will separate things
The newspaper editor believes that “in the long run, the US ban on Chinese technology will raise the price of various chips,” FT Asia editors said in the article. “The bill (effect) will eventually create a ‘chip divide’ between the East and the West, and businesses and consumers on both sides will eventually accept it.”
Globally, China accounts for about 20% of global chip production, and its main production of chips of 14nm and above is still used in many cars and other products. This fall, Biden’s sanctions mainly hit China’s advanced chip production in the 3nm to 14nm range. The view that chip prices are inevitable is mainly due to cyclical fluctuations in supply and demand, and the impact of cycles on prices. The forecast theory suggests that if the U.S. significantly reduces China’s chip supply by successfully disrupting the sale of chip-making equipment to Chinese chipmakers, the impact could be higher prices.
So far, analysts haven’t predicted how much chip prices will rise in 5 to 10 years, in part because chip supply and pricing are cyclical and it’s difficult to forecast even a quarter in advance, let alone a full year or up to a decade. Other factors are expected to drive price increases in the coming years, including raw material shortages and shortages in specific chip categories.
Image
Engineers are not optimistic about sanctions
The sanctions announced by the Biden administration in October have sparked resentment among semiconductor engineers, many of whom have decades of experience in the industry. The media quoted an online exchange between engineers from a panel of semiconductor experts in late November, noting that U.S. sanctions have raised concerns among the engineering community.
The director of new business development for an Atlanta-based company said, “The U.S. should… Invest in and stay ahead of China’s two technology nodes, stay ahead of the curve instead of focusing on tripping competitors. ”
The company’s technical advisers are concerned that Biden’s sanctions could hurt future technology research. “The current electronic age owes much to Chinese scholars working in the United States, both from the United States and imported from Chinese mainland and Taiwan since the 1980s,” he said at the conference. ”
“The advent of modern digital electronics requires the entire factory to be intelligent. This is by no means a monopoly of the United States. The Biden administration’s current approach to this particular issue is extremely damaging and has poor prospects. ”
The impact of price increases is likely to be limited
At the same time, there are similar views on the negative impact of the bill in the trade link.
Some industry analysts pointed out that due to supply shortages and increased raw materials, chip prices will rise in the next few years anyway. His Biden’s restrictions are mainly focused on very advanced chips, but other high-volume chips are not limited. “Rather, it will circulate as it does now.”
The limitation of high-end chips may not have a large impact. Because “if high-end chips incur some additional costs due to restrictions and may lead to a decline in sales as a result, most users will not notice.” ”
But analysts added that sanctions would also push China to develop its own technology, a process that could take years. “But homegrown technology doesn’t replace what it wasn’t sold in the first place, and then compete with [U.S.] technology for a long time, which is always a gamble.”
Image
Wait-and-see emotions are dominant
Although some believe that chip prices will rise due to the Biden administration’s sanctions against Chinese chipmakers, many factors will play a role in the coming years, including the possibility of raw material shortages, so it will be a complex analysis process, and everything remains to be seen.
As a defense against unknown risks, ambitious growth plans from chip factories built in the U.S. by Intel, Micron, TSMC, Samsung and others will produce more chips, but the effects of the output will not be felt in the coming years. European chipmakers are adopting a similar strategy.
