The 2022 National Security Strategy, released by President Joe Biden in October, emphasizes a series of regional frameworks led by the United States to support its Indo Pacific strategy, such as the AUKUS (trilateral security agreement between Australia, the United Kingdom and the United States), as well as Australia, India, Japan and the United States – commonly referred to as “Quad”, later referred to as “four plus”, because South Korea Vietnam and New Zealand participated in the Quad Conference.
The so-called “Chip 4” alliance formed under the leadership of the United States can be explained in this context. The India Pacific Economic Framework for Prosperity (IPEF) led by the United States also proposed the possibility of establishing a formal system to allow participating countries to obtain emergency semiconductor inventory when the supply chain is interrupted.
Unlike IPEF excluding Taiwan, the “Chip 4” alliance includes Taiwan, Japan, South Korea and the United States. These four countries together account for 82% of the total output of the world semiconductor industry. It is worth noting that the United States has also signed defense treaties with Japan and South Korea, which may enable the United States to use its regional security influence in negotiations.
Although “Chip 4” is widely regarded as a measure of the United States to curb China, the details of the alliance are still unclear. In late September, four relevant countries held a preliminary meeting. South Korea was worried about confrontation with China, so its position wavered.
However, in the long run, South Korea’s participation is inevitable, because the new South Korean government led by President Yoon Suyan gradually gets rid of the ambiguity of the previous government. For example, the Yin government recently announced its first Indo Pacific strategy. A recent report issued by the Korean International Trade Association also pointed out that South Korea basically depends on the United States and its allies in semiconductor manufacturing equipment, and 77% of the import value of Korean semiconductor equipment comes from the United States, Japan and the Netherlands.
The conflict in the industrial frontier has been written into the American national security thought
Although it is difficult to predict the actions that the United States and China may take in the chip war, it is certain that the leaders of the United States and China will enter the country to strengthen their political positions in 2023. China’s President Xi has just won an unprecedented third term of office, and it is widely expected that he will take charge of the country for life. At the same time, US President Joe Biden saw that the Democratic Party had won the mid-term election, avoided the expected “red wave” and kept the control of the Senate.
Most importantly, for the United States, establishing an elastic high-tech supply chain has become an integral part of its national security strategy. The 2017 National Security Strategy released under President Donald Trump of the United States has emphasized this specific level, emphasizing the “erosion of the U.S. manufacturing industry in the past two decades, and the possibility of” being unable to produce military specific components at home “described in the Strategy.

After the CHIPS Act was signed into law in August 2022, the “National Security Strategy for 2022” led by Biden further linked industrial policies with the national security goals of the United States, point out “The market alone cannot cope with global technological change, global supply disruption, and non market abuse by the People’s Republic of China and other actors. The new national security strategy concludes that strategic public investment in areas where private enterprises cannot mobilize is a good solution to the problem. Entering 2023, the updated national security strategy will continue to guide the foreign and domestic policies of the United States to strengthen its industrial base.
In 2014, the US government proposed a “third offset strategy”, which aims to cultivate US capabilities in various fields, including unmanned systems and artificial intelligence, to offset China’s growing ability to challenge US military projection, especially in the Western Pacific. After the first “offsetting strategy” against the Soviet Union’s superior strength in terms of quantity through nuclear weapons in the 1950s and the “second offsetting strategy” against the Soviet Union’s nuclear capability through precision strike technology in the 1970s, we promoted technological innovation and attacked China’s military civilian integration at the same time. In fact, all three offset strategies are obviously supplemented by export controls, such as the Arms Export Control Act during the second offset in 1976 and the Export Control Reform Act in 2018. In this sense, the on-going chip war can be interpreted as the extension of the third offset strategy, which may continue to affect the United States’ action against China.
China will blaze a new trail
If the advanced manufacturing capabilities and HPC chips of AMD and Nvidia cannot be obtained, Chinese IC design companies and terminal equipment manufacturers focusing on AI applications will face hardware related restrictions. However, some people in China’s semiconductor industry believe that mature process technology is a way out, especially when Chinese IC design companies gradually catch up with international peers in the fields of power management IC (PMIC), microcontroller and micro electromechanical system (MEMS).
Similarly, experts familiar with China’s AI chip industry pointed out that domestic mainstream AI chip design companies still focus on ASICs related to image signals and smart cameras, which can be manufactured on mature nodes, thus pointing out a more edge oriented rather than cloud based road for China’s AI development.
In fact, the performance of many domestic AI chips is still limited by software, which led some experts to believe that China’s AI industry should now focus on software performance breakthroughs. For example, AI chips based on 28nm technology can be enhanced by improved algorithms and software to compensate for hardware limitations. Although they cannot compete with AI chips in cloud applications, they are still qualified for AIoT and automotive applications.
At the same time, as the main catalyst of US sanctions, China’s military civilian integration strategy is likely to continue, because mature processes can still support most of its weapon systems. However, it remains to be seen whether its ability to use supercomputing for weapons development will be affected in the long run.