A display of chips produced by Chinese companies. (PHOTO: VCG)

By QI Liming

Since the introduction of The CHIPS and Science Act  in August 2022, U.S. politicians have stuck to their guns, constantly directing the country's trade and technology policies through generalized and vague instructions. It's time for these "amateurs" to stop the haphazard intervention on the economy and technology.

These self-harming policies have their own inborn defects, and thus won't proceed as envisaged. Rather than coercing its allies to take sides at the expense of their own development, the U.S. should seek common progress for humankind in a rational and inclusive manner.

In addition, losing China, a huge semiconductor market, would be unwise. In the past, Chinese local chip-makers had stepped up to fill the market vacuum created by American export restrictions.

Losing Chinese market intolerable

From the perspective of U.S. manufacturers, chief executives from the U.S.-based Semiconductor Industry Association (SIA) have already realized they couldn't lose the huge market in China.

On July 17, according to Reuters, as U.S. politicians were fermenting more stringent policies to curb the development of China's chip technology, chief executives of Intel Corp, Qualcomm Inc and Nvidia met with top Biden administration officials, calling on the Biden administration to "refrain from further restrictions" on chip sales to China.

As Chris Meserole, director of the artificial intelligence and emerging technology initiative at the Brookings Institution said, "The biggest firms have to navigate some of the tumultuousness ahead. But it's going to be costly, and it's going to introduce a lot of challenges in their operating environment."

With the U.S. attempting to leverage control over the advanced technology race, tech businesses are caught in the middle, said Meserole.

Great loss cannot be retrieved

As senior researcher Martin Chorzempa noted on the website of Peterson Institute for International Economics, export controls have become one of the most contentious battlegrounds. Semiconductor export controls aimed at China, however, have also embroiled allies such as South Korea and Holland, he said.

The downward trend in trade data comes amid increasing efforts by the U.S. to restrict China's access to advanced chips and related equipment, especially the key players in the global chip supply chain.

Semiconductor shipments from South Korea to China saw a 35.7 percent year-on-year drop in May, and trade in memory chips plunged 53.1 percent, according to South Korea's Ministry of Trade, Industry and Energy.

Andrew Sheng, distinguished fellow at the Asia Global Institute, University of Hong Kong, told the South China Morning Post that the U.S. chip war on China weaponizes interdependence, but the outcome is far from certain.

Self-reliance manufacturers harvesting and promising

Cutting off China's access to essential technology at vulnerable choke points, in turn, has promoted China's chip manufacturers self-reliance.

"I don't underestimate China's ability and resolve to find a way to build next generation technologies and to also utilize some lagging technologies to still build really important products," Daniel Newman, CEO and principal analyst at research firm Futurum Group, told CNBC.

Paul Scharre, vice president and director of studies at the Center for a New American Security, said that, "Nothing's impossible."

"I certainly think in the long run, we should expect the Chinese to be able to make these technological advancements. It's quite possible that they're able to do so faster than maybe others might expect," said Scharre.

According to UK website Verdict, Chinese chip supplier profits are soaring as China shrugs off U.S. chip curbs. China's manufacturers are now relying on domestically sourced parts, which has led to a massive boost in revenue for domestic technology companies.