Systemic Failure and Strategic Defeat: The Microchip Front in the Sino–US Trade War

China’s infringement of U.S. intellectual property (IP) rights is one of the main disputes underlying the Sino-U.S. trade war. And disputes over microchip technology are some of the most common in the IP battle.

An engineer works in the clean room facilities at the LETI, a French research institute for electronics and information technologies founded by the French Alternative Energies and Atomic Energy Commission (CEA). JEAN-PIERRE CLATOT/AFP/Getty Images

The unfortunate fate of Fujian Jinhua Integrated Circuit, one of China’s three major major microchip firms, serves as a window for determining the success of China’s strategy of trying to play technological catch-up. It also provides a good through through the fog of war on the “battlefield” of intellectual property disputes between China and the United States. In the competition between high-tech countries, China’s blatant strategy of theft has hit a nerve with the Trump administration’s policies.

China’s Long March Through the Microchip Industry

China’s infringement of U.S. intellectual property (IP) rights is one of the main disputes underlying the Sino-U.S. trade war. And disputes over microchip technology are some of the most common in the IP battle.

China has been researching and developing microchips for over half a century. At present, however, the “sore spot” of the microchip still exists, and the root of this sore spot is precisely the state-run system that China is so proud of in its high tech research and development. This type of system concentrates and directs all of the nation’s forces in technological research, by which the government takes the lead in coordinating organizations, assigning tasks, providing funds, and pursuing breakthroughs. Leaving aside production costs, gains made are first applied to the military, because the military only wants products that are usable, and the government pays all the bills anyway. Meanwhile in the civilian sector, high-cost technology developed through domestic researches is not as cost-effective or reliable compared with purchasing foreign technology.