Israeli Semiconductors and the US-China Tech War

As the United States and China find themselves locked in a battle for technological superiority, Israel’s semiconductor industry could become the next “chip” on Washington’s shoulder.

Semiconductors, the building blocks of modern digital technologies, hold the key to achieving breakthroughs in everything from artificial intelligence (AI) and big data to robotics and virtual reality. Concerned that advances in Chinese semiconductor technology benefit the People’s Liberation Army, and seeking to maintain America’s technological edge over the People’s Republic of China, Washington has gone on the offensive.

Chinese telecom giant ZTE was among the first to be hit with crippling sanctions in early 2018, after violating U.S. embargoes on Iran and North Korea. The move prevented ZTE from acquiring critical components from American semiconductor manufacturer Qualcomm. A year later, the Trump administration slapped export controls on Huawei, banning the sale of U.S.-made chips without prior license approval. In September 2020, the United States expanded its “Entity List,” imposing restrictions on China’s largest state-funded chipmaker, Semiconductor Manufacturing Industrial Corp (SMIC). Washington believes these companies are aiding the Chinese Communist Party in conducting espionage and supporting China’s civil-military integration efforts.

U.S. pressure has forced Taiwan Semiconductor Manufacturing Co to turn its back on its biggest customer, halting sales to Huawei. 

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