See, this was always the problem with Chinese efforts to indigenize their semiconductor industry. Each individual Chinese firm had no incentive to use Chinese suppliers, rather than their more established Western competitors. Well, guess what, the US Government has solved that coordination problem for them. Just about every Chinese company, up and down the supply chain, now has an excellent reason to buy Chinese. Sure, they’ll take years to work out the kinks, and there will be lots of chances to point and laugh in the meantime. But in the long run, the Sullivan-Blinken strategy of squeezing the Chinese chip industry might end up being one of the most counterproductive geostrategic ideas of all time.
See, this was always the problem with Chinese efforts to indigenize their semiconductor industry. Each individual Chinese firm had no incentive to use Chinese suppliers, rather than their more established Western competitors. Well, guess what, the US Government has solved that coordination problem for them. Just about every Chinese company, up and down the supply chain, now has an excellent reason to buy Chinese. Sure, they’ll take years to work out the kinks, and there will be lots of chances to point and laugh in the meantime. But in the long run, the Sullivan-Blinken strategy of squeezing the Chinese chip industry might end up being one of the most counterproductive geostrategic ideas of all time.