Trump’s hard-hitting sanctions on Chinese chip manufacturers made China rush to raise semiconductor giants at home. President Jinping was exceedingly ambitious for his “Star startup project” that would have made China a chip-powerhouse. However, the venture gloriously failed. The “pioneering” Chinese chip project did not only lead to piling up of multiple non-performing assets (NPAs) but also resulted in flooding the tech market with refurbished and fake chips. Resultantly, a desperate China is now pleading its citizens overseas to buy the Japanese semiconductor chips and send them back home.
As reported by Chinese analyst Jennifer Zeng on her personal blog, Chinese state-owned enterprises (SOEs) are now asking Chinese citizens to buy chips from foreign countries. In her report, Jennifer quoted an overseas Chinese as saying “Today, a friend of mine was contacted by personnel from a Chinese central level state-owned enterprise, and was asked to buy 20 pieces of Japanese chips. My friend worried that this would break the law.”
The man further stated, “I was very surprised upon learning this news. It turns out that China cannot even produce camera chips, and has to import Japanese ones. They are trying to launch a people-ocean tactic, like having many ants moving things.”
Ironically, a CCP affiliated military channel recently threatened to nuke Japan if the latter dared to launch any military offence against China in an event of China’s aggression against Taiwan. Now, the Chinese enterprises are resorting to pleading for the Japanese chips.
Exclusive: How ironic! While #CCP vows to #NukeJapan, its state-owned enterprise begging overseas Chinese to buy #Japanese #chips…Remember last year overseas Chinese mobilized & almost bought out all #masks in the world? Don't underestimate this.https://t.co/AiZRsw1ZYP pic.twitter.com/9OGRUnryUv
— Jennifer Zeng 曾錚 (@jenniferatntd) July 18, 2021
China’s unquenchable thirst for foreign chips could also make it invoke the infamous Diagou industry to help it deal with the Chinese chips crisis. Diagou traders, as reported by TFI last year, are a part of vast grey market trade, where thousands of traders buy the products in overseas markets sought by Chinese buyers only to be shipped back to mainland China later. It is believed that around half a million Diagous are operating in various countries currently, sourcing and at times smuggling products for Chinese buyers and making hefty profits.
Not just that, the Chinese government is also striving to take over the foreign Chips-making units and machines in its bid to secure its crucial supply chains. Earlier this month, Nikkei Asia reported that China’s biggest Smartphone assembler, Wingtech Technology, is buying the largest chip facility in the U.K. in a move to secure additional capacity amid a global semiconductor supply crunch. Much to China’s dismay, the deal has already been put under review by the Boris Johnson government.
Also, it was reported in the Washington Post that Beijing has been pressuring the Dutch government to allow its companies to buy ASML Holding NV’s marquee product: a machine called an extreme ultraviolet lithography system that is essential to making advanced microprocessors. The machine, desperately being sought by the Chinese government, is widely used by the companies like Intel, Samsung and Taiwan Semiconductor Manufacturing Company. However, the USA is reportedly blocking the deal and is pressurizing ASML to not issue an export license to Chinese buyers.
After the Trump-imposed ban on top Chinese chip makers from using American technology, the Chinese tech sector has run out of its processors. The crisis has already claimed the once-flourishing Chinese giant named Huawei. As China’s chip crisis worsens of late, more and more Chinese companies risk meeting the same fate as Huawei.
The geopolitical tensions between China and the US are unlikely to be resolved soon, and Chinese chips manufacturers’ access to US-produced chips and other key components has been severely restricted, which is why the Jinping administration is trying to work things out. However, Jinping’s forlorn strides to secure country’s crucial supply chains have proven to be a dazzling embarrassment for him so far.