US and China fight over microchips and Taiwan's role
Sanctions, Import Dependency and Taiwan: Challenges in the Technology War between the U.S. and China
Gabriel Thomas (GT)May 8, 2025
The U.S. has been using sanctions for months to prevent China from importing and manufacturing advanced microchips. These chips are critical to the development of technologies such as artificial intelligence, space travel and the military. The Netherlands and Japan have also joined the sanctions.
China is currently unable to produce high-tech microchips itself and therefore relies on imports. How much do the sanctions actually affect China? And what role does the democratically governed island of Taiwan play?
The prices for chips have doubled several times. In the southern Chinese technology metropolis of Shenzhen, often referred to as the "Chinese Silicon Valley," numerous high-tech start-ups are experimenting and producing. Some of them, like the company Elephant Robotics, use microchips from abroad. Prices for these chips have doubled several times due to U.S. sanctions, resulting in significant financial pressure.
The U.S. has imposed export restrictions since last October to prevent China from importing and producing cutting-edge microchips. This is specifically to prevent China from using such chips for military purposes and artificial intelligence. The biggest challenge for China is to replace the chip production machines from abroad. Without these machines, the production of the chips is not possible.
Experts believe that China will find ways to deal with them despite the sanctions. It may be possible to use older chips for many applications, but it will require more power, resources and money. International observers, however, believe it is doubtful that China will ever be able to catch up to the West's lead, as competition is also steadily advancing.
Taiwan is responsible for producing 90 percent of the most advanced microchips. China considers Taiwan its own territory and repeatedly threatens the democratically governed island with military force. Experts believe that the high-performance chips could protect Taiwan to some extent from a military confrontation. A blockade of supply chains in the Taiwan Strait would economically impact everyone, including the U.S., as it provides military support to Taiwan.
Nevertheless, neither China nor the United States is ready for a military confrontation, according to experts. Both sides realize they must continue to upgrade their military equipment to ensure they can win a war. Still, observers warn of increased incidents, such as the incident in early June when a Chinese warship pushed off a U.S. destroyer in the Taiwan Strait. Such incidents could lead to unintended escalation.
