A new bamboo curtain has fallen across China, with a reported blanket ban on US chips. The move is bad news for long-time Silicon Valley tech giant chipmaker Intel, whose Chinese sales accounted for roughly a quarter of its global revenues.
Big names join Semiconductor ban
But China’s retaliatory move may not only be bad news for US chip makers such as Intel and AMD but also for China’s own communications infrastructure. The order from China’s Ministry of Industry and Information Technology includes big players China Telecom, China Mobile, and China Unicorn, together with other Chinese operators. All are now obliged to submit draft deadlines for the replacement of foreign microchips. It is uncertain to what extent the CCP actually believes that Intel and AMD chips are likely to have built-in spyware or anything of the sort. The ban can be seen as part of a broader strategy on the part of the Chinese Communist Party (CCP) to end its country’s long-term reliance on US technology.
The ban also seems like a face-saving exercise following moves by the US to restrict the influx of Chinese technology into the US on grounds of national security. The most recent of these was last month’s presidential warning that the digital technology being used in Chinese cars exported to the US could be used for purposes of cyber espionage. Four years ago, the Federal Communications Commission (FCC) barred Huawei and ZTE-made telecommunications equipment from US networks for security reasons, despite Huawei’s vociferous claims at the time that the FCC’s fears were unfounded.
Working conditions inside Huawei considered “brutal”
A few days ago, it was reported that Huawei Technologies is constructing a new massive semiconductor research and development facility in Shanghai. To staff the new center, Huawei is reported to be offering salary packages worth up to twice as much as local chipmakers. But, although Huawei’s compensation package may be seen as generous, there is still a very big question mark over whether China’s attempts to replicate Silicon Valley’s culture of innovation inside an increasingly isolated Communist China will bear long-term fruit. Working conditions inside Huawei are reputed to be “brutal” by Western standards. Huawei demands total commitment from its workforce and reportedly expects its engineers and chip designers to work 12-hour days seven days a week.
While initial contacts for high-tech workers will run for three years, local commentators suggest that few skilled staff will have the stamina to make it to renew their contracts at the end of that time without suffering burnout, potentially posing problems for the facility’s future efficiency and capacity for innovation. The vast new Huawei facility in Shanghai will include trains for commuting between the research campus and the workers’ residential buildings, which are expected to accommodate over 35,000 staff.
