International Regulations on Semiconductors Export Control
The 21st century is an age of technology export and sharing. Technology export, like semiconductors, is essential to technical innovations and productions: most electronic equipment we use in daily life is an integration of technologies from various countries. Take iPhone 13 as an example. While Samsung from Korea and BOE Technology from China provide the OLED screen technology for iPhone 13, its DRAM (dynamic random-access memory) is supplied by SK Hynix, also a Korean semiconductor company. If we compare iPhone 13 as a man, his organs come from different countries around the world, and all countries must continue supplying their technology products to keep his blood flow. Without the work and contribution from any country in the industrial ecology, this man called iPhone 13 may soon die. Unfortunately, governments in many developed countries choose to restrict their cutting-edge technologies exports to kill other countries’ electronic industries.
While governments in countries with core semiconductors technology, exclusively developed countries, can control their semiconductors exports policies without regulations, developing countries don’t have effective counter measures to access stable semiconductor supply. It is not rare to see developed countries’ governments control semiconductors exports to enact technology sanctions on their political threats and maintain their technology monopolization. However, this phenomenon does not only bring destructive effect to developing countries domestic electronic industries but also significantly reduces developed countries’ semiconductors companies’ interest, increases production cost, and devastate developed countries’ supremacy in semiconductors technology. Hence, we should regulate the export of semiconductors through international trade laws because this can indiscriminately protect companies’ access to buy and sell semiconductors, providing opportunities for both the developing and developed countries’ electronics industries and technology companies.
I want to specifically talk about international regulations on government’s semiconductors export control because semiconductor is an extremely important material in electronic productions and a representation of the various cutting-edge technologies whose exports are under strict supervision by the countries’ governments. As a crucial part for many electronic appliances as well as for social infrastructure that support our everyday life, semiconductor, in fact, has properties of both the conductor and the insulator, enabling it to control electricity conduction. From micro vision, conducting electricity can represent 1in binary logic, which is used in computer’s embedded systems, while no electricity represents 0. This property of duality makes semiconductor an essential material for computer production. Also, the advancement in semiconductor technology directly determines computer systems efficiency, hardware’s miniaturization, and energy savings. In other word, semiconductor production is the heart of electronic industries. Without advanced semiconductors, the industries could die within a production cycle and vanish from the market.
The international trade laws supported by the Semiconductor Industry Association (SIA) can be directly used to regulate international semiconductors trades among companies and prevent the intervenes from the countries’ governments. Currently, the government has too much power to control semiconductors exports. And they always restrict chips export or even enacted technology sanctions for political issues. This contradicts SIA’s policy agenda that free, open international semiconductors trade environment is the primary engine of global technology development. Also, companies from both the export and import countries are not willing to see governments’ control on semiconductors exports.
Free international semiconductors markets bring direct benefits to the developing countries by providing them equal opportunities to develop their domestic electronic industries. Most developing countries are not and, most likely, will not be capable for independent research and development on semiconductors. Following Moore’s Law, semiconductors products’ performance doubles every eighteen months; the update is so fast that rarely a generation of semiconductors can last more than 2 years in the market. It is, in fact, an almost impossible mission for the developing countries now to catch up the rapidly developing semiconductors technology in 20 years. Also, semiconductor’s technology must be 3–5 years ahead of the related core electric industries, like chip production, and 5–7 years ahead of application production, such as phones and computers. So, it may take more than 30 years for the developing countries to produce their own semiconductors that can be accepted in the market.
As a result, developed countries can easily hinder developing countries’ domestic technology companies by restricting technology export policies to sustain their technical supremacy. For example, the US government added Huawei to its economic blacklist to protect and solidify its superiority in 5G technology on May 1, 2019. After this action, Huawei immediately lost more than 10 percent of its stock market value, stopped its production line, and was forced to replace all the chips in their phones. Although Huawei eventually adopted its own chips “Kirin chip”, which Huawei has been researching and developing since 2006 and spent tens of billions RMB, the performance’s decrease and price’s increase of its products make Huawei lost a great portion in 2020’s market shares.
Some may argue that semiconductors exports without government control only benefit the developing countries and do great harm to the developed countries. The biggest concern is national security, since it seems that every country can access the sensitive, cutting-edge semiconductors technologies from the developed countries. Also, the government can no longer protect their semiconductors technology patent and may lose their technology supremacy by immediately controlling semiconductors’ exports. What’s more, the developed countries lost an essential bargaining chip on global politics.
Those arguments are not reasonable. First, different from nuclear powers, semiconductor technology is civilian technology developed by civilian companies without military affiliation. Also, no semiconductors companies sell their core technologies, which is their core competitiveness in the market, or even their latest products. As I mention above, semiconductor’s technology must be 3–5 years ahead of the related core electric industries. The companies are just selling products that they developed more than 3 years ago. Also, international trade laws and national intellectual property protection laws have the power to protect companies’ and personal technology patent across the world. Government’s controls on export, in fact, don’t help technology patent protection at all. What’s more, enacting restricting semiconductors exports policies is lessening the developing countries’ reliance on this country. Although it is almost an impossible mission for companies in developing countries to develop their own advanced semiconductors technologies, Huawei in China made it. Although it suffered great economic loss, Huawei went on the path of not relying on the US’s chips export. What’s more important, more than five developed countries can independently research and develop the latest generation of semiconductors. Restricting semiconductors exports is giving the interests and political influence on other developed countries.
Furthermore, the semiconductors sellers, mostly in developed countries, need raw materials for semiconductor manufactures and cheap labor force for related electric productions; they also expect to earn great interests by selling semiconductors and increase their radius of influence in the market by providing technology support to their trade partners. What’s more, the export of semiconductor can directly impact the global prices of semiconductors, chips, personal computers, and the related markets. Regulating semiconductors exports only by international laws would help stabilize the markets’ price, benefiting customers around the world.
For global electronic technologies growth, the welfares of customers around the world, the interest of technology companies form both the developed and developing countries, and both the developed and developing countries’ sustainable development, we should create a free international semiconductors market by using international trade laws to regulate governments’ control on semiconductors exports.
