Saudi Minister of Communications and Information Technology Eng.
Abdullah Al-Sawaha unveiling the manufacture of the first Saudi-made
smart chip at a technology conference in Dammam in 2021 [photo credit:
Saudi Federation for Cybersecurity, Programming and Drones]
Superficially, Chinese investment in its tech sector in return for
access to Chinese IP is a good move by Saudi Arabia. However, Ms Olcott
is correct to acknowledge that the “marriage between [China and Saudi
Arabia] on tech deals carries risks for the kingdom….” Nevertheless, by
offering little by way of elaboration, Ms Olcott is doing her readers a
disservice consistent with much of the media's failure to understand the
true impact of US tech sanctions against China.
As I posted on the Arab Digest Facebook page
on 20 February, one of the principle US aims, successfully achieved to
date, is to deny China access to lithographic machines which use Extreme
Ultraviolet (EUV) to manufacture microchips, technology in which the
Dutch company ASML pretty much has a global monopoly. EUV is a
prerequisite for manufacturing the advanced 3nm and 2nm chips dominated
by Taiwan’s TSMC (Taiwan Semiconductor Manufacturing Company), and even commercially viable 5nm and 7nm chips.
It is the case that Huawei's Mate 60 Pro mobile phone, launched late
last year, runs a 7nm chip manufactured by China’s Semiconductor
Manufacturing International Corporation (SMIC); but this depends on
outdated Deep Ultraviolet (DUV) which is expensive in any case and has
waste rates up to 70 percent through faulty chips meaning that state
subsidies are a sine qua non. In short, the Mate 60 Pro is
principally a politically-driven project intended to persuade the world
that China can do 'state-of-the-art' despite US sanctions. The reality
is that it cannot.
This being said, there are two related caveats to this.
First, China may manage to develop EUV technology on its own as it doubles down on its xinchuang project which aims to replace foreign suppliers of, inter alia,
semiconductor technology with domestic ones. However, given the extreme
and increasing secrecy which surrounds Chinese research, one can only
speculate.
Second, we need to be careful about Xi Jinping’s definition of ‘self-sufficiency’ and how soon it can be realised. Christopher Thomas and Sarah Kreps note in a 26 January essay for Foreign Affairs:
Because technology competition is not just a race between two
countries or two sets of companies, it will not be won by a government
lab or a company delivering singular, specific technological
capabilities. The mark of a successful technology is that it is
delivered as a product or service to thousands of businesses or millions
of consumers. Achieving this scale requires an ecosystem of companies
working together…. The Chinese government is starting to cater to its
global tech ecosystem rather than focus only on its national technology
industry. The incentives built into the Digital Silk Road initiative, as
well as loan guarantees and subsidies for technology purchases, are
encouraging foreign governments across Africa, Central Asia, and the
Middle East to adopt Chinese technologies…. For countries with ambitions
to advance their digital and AI technologies, Chinese financing and
foundational Chinese technologies are a welcome solution.
Thus, not least thanks to cooperation with the likes of Saudi Arabia,
we should assume that China will achieve important technological
breakthroughs at some point. However, as Don Weinland wrote in The Economist on 13 November, this: “…is likely to take many years — and TSMC will continue to race ahead in the meantime.”
So what has all this got to do with Frank Loesser’s 1945 song On a slow boat to China?
Most frequently, and based on the Loesser lyrics, the idiom is taken
today simply to mean a long, slow journey to a desirable destination, in
the Saudi case the destination is Crown Prince Mohammad bin Salman’s
Vision 2030. However, the origin of the title lies in the game of poker
where it was used, back in the day, to describe someone who loses
“steadily and handsomely.” Putting to one side “handsomely” it is, in my
view, this second course to which MbS, together with China’s Helmsman
Xi Jinping, risks condemning his country.