Global Times: China can no longer be indecisive in developing domestic chips

The U.S. Department of Commerce on Monday ordered a ban on U.S. companies from selling products to China's ZTE, which will suffer huge losses. ZTE's products have a large number of components imported from the United States, especially chips. After the news came out, ZTE's A shares and H shares were both suspended, and the stocks of its U.S. suppliers fell sharply, with the worst falling by more than 30%.

The US has been investigating ZTE for a long time. ZTE has been accused of shipping sanctioned telecommunications equipment to Iran and North Korea. The US had already imposed sanctions on ZTE in 2016 and reached a settlement in 2017, but this time the US said ZTE made false statements in its promise to punish its employees. However, most analysts believe that these are just excuses from the US.

As this case has lasted for a long time, it is difficult to say whether the US is doing this now to cooperate with it in exerting trade pressure on China. However, this incident will definitely touch the Chinese society and drive the Chinese people to think that we must speed up the development of core semiconductor technologies such as chips.

China's overall technological strength is lower than that of the United States, but after decades of reform and opening up, we have also laid a solid foundation and accumulated strength. If China today is determined to solve a difficult problem, it can usually do it.

The problem is that we are in the midst of globalization, which provides cheaper solutions to problems. This is a convenience, but it also breeds inertia. When it is easier and cheaper to buy chips than to produce them yourself, a market orientation is formed, which solidifies the reliance on external technology.

China is already able to produce low-end and mid-range chips. The production of more sophisticated chips requires greater investment and market response. China imports more than $200 billion worth of chips each year. If a considerable portion of this huge market is used to support the development of domestic chips, then this development will be unstoppable. Once this part of the Chinese market is lost, the momentum of American high-tech companies to continue upgrading their products will be lost.

In the past, the Chinese market did not doubt the credibility of American suppliers and did not think much about what would happen if the US cut off supply. However, ZTE's experience has proved that the US supply is not reliable. The world supply chain is fragile in the face of politics. The Americans have begun to seriously consider how to curb China's rise. Restrictions on high-tech exports to China are the trump card they have been using, and they are likely to expand the scope of application of this trump card in the future.

China must be prepared for the worst and form a strong plan to organize its domestic market to support the development of core technologies. We cannot let the US loosen or tighten its exports to China and disrupt the rhythm of developing our own core technologies. Now is the time for us to make a real decision.

China is the world's largest telecommunications market, and the market is power. We have always hoped to exchange market for technology, which makes sense. The US is very opposed to our approach, so we should use this market to directly support the research and development of our own high-tech companies. Maybe for a period of time, we will have difficulties, but this difficult period will definitely pass, and the result will be that the technical capabilities of Chinese local companies will be completely renewed.

We certainly cannot allow the US to use chips as a stick to wield against China. If the convenience of previous purchases made China half-hearted in developing its own chips, then from now on, the illusion that we can live well with American chips should be shattered. China has the ability to organize scientific and technological research, and the mobilization power needed to promote the gradual replacement of foreign chips with domestic chips. The most important thing is determination.

The Trump administration is helping us make this decision. If China really changes its mindset, perhaps many years later, we will thank the United States for its restrictive decision today, and be glad that it has prompted China to regain its senses earlier.

Once China accelerates the development of domestically produced chips, the US attitude will soften. US semiconductor products can still enter China, but by then the initiative will be firmly in our hands. In order to change the situation, we must act.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.