Just over a year ago, when Chinese smartphone and telecoms giant Huawei launched its latest smartphone, the Mate60 Pro, eyebrows were raised in Washington. More than 85% of the 37 chips used in it were locally manufactured, including the advanced 7 nanometre (nm) chip.

The Biden administration wondered how China had managed to produce the advanced chip that powered the phone. The White House was secure in the knowledge that the CHIPS and Science Act of 2022 had erected enough high walls around its cutting microchip technology, ensuring that it remained out of China's reach. Additionally, in 2019, the US government barred Huawei from accessing its high-end chipmaking tools, citing national security concerns.

The US efforts to contain China's steady rise as a rival global power do not stop at reducing the dragon's influence in trade and geopolitics, the Biden administration has also actively sought to impede the country's rapidly growing semiconductor or microchip industry. This has triggered a chip war between the world's two biggest economies. The US wants to regain its leadership role in the semiconductor ecosystem, while China wants to become self-reliant to propel its economy to be the world's number one. At the heart of this conflict is the recognition that semiconductors are essential not just for consumer electronics but also for advanced technologies, including artificial intelligence, quantum computing and military applications.

It is a matter of worry for the US that its containment policy against China has not had the desired effect. It invokes national security as one of the primary reasons for checkmating the Chinese chipmaking industry's rapid growth.

Two decades ago, China lagged far behind the US in the chip industry by several generations. But American policymakers overlooked China's eagerness to flex its muscles in the microchips industry for long. Today, there is a global consensus among experts that Chinese companies are behind the world's most advanced chip-making companies by only three to five years. For microchips, this gap is too narrow.

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