China's chip exports have surpassed one trillion yuan, marking a significant push into the international market. Given China's strong chip competitiveness, the US has been forced to retaliate by substantially increasing tariffs on imported Chinese chips. This marks a stark contrast to the US's previous demands for market openness, now resorting to measures akin to isolationism.

Undeniably, US chips remain the global benchmark. NVIDIA, the leader in AI chips, commands 90% of the global market. Server chips are still dominated by Intel and AMD, and the top three global analog chip companies are all American. Consequently, US chips account for 50% of the global chip market.

However, it cannot be overlooked that the US has lagged behind in certain chip technologies. TSMC leads in chip process technology, and despite billions of dollars in US support, Intel has struggled to regain a technological edge. Samsung now dominates the memory chip market, with South Korea's SK Hynix and Samsung collectively holding nearly 70% of the global memory chip market. These developments indicate that US chips have lost their leading position in some industries, causing the US significant concern about a potential shake-up in its chip industry leadership.

Meanwhile, China's chip industry is surging ahead. In 2014, China established the Integrated Circuit Industry Investment Fund to propel the industry forward. A few years later, the US partnered with Japan and the Netherlands to restrict the sale of advanced chip equipment to China, leaving Chinese chip companies unable to purchase EUV lithography machines. Consequently, China prioritized the development of mature chips.

Over time, dozens of Chinese wafer fabs have come online, rapidly increasing China's chip production capacity from less than 10% to 30% globally. As China's chip production capacity grows, its chips are not only meeting domestic demand but also making significant inroads into the international market.

China's chips are primarily mature, offering comparable performance to similar US chips at a much lower price. Previous reports indicated that China's analog chips forced Texas Instruments (TI) to drastically reduce prices, from 70 yuan to just 1 yuan, while similar Chinese chips are priced as low as 70 cents, making it difficult for TI to compete. TI's net profit margin in the second quarter of this year fell by one-third compared to 2021.

TI, Broadcom, and others have accumulated chip inventories, forcing them to offload chips any way possible. Recent news revealed that Ukrainian authorities discovered a large number of TI and Broadcom chips in Russian missiles, indicating that US chip companies are desperate to sell, even if it means circumventing US restrictions. These companies would argue that these chips were sold by unknown third parties.

Faced with this situation, the US has recently imposed significantly higher import tariffs on Chinese chips and even mandated that American companies refrain from using Chinese chips. However, since the proportion of US-made products is low and US exports constitute a small share of the global market, markets outside the US can continue using Chinese chips, impacting only American companies.

These measures are actually detrimental to American companies because other regions' companies can adopt lower-cost Chinese chips, reducing production costs. American companies already face high manufacturing costs, and increased chip costs further elevate their product costs, making American manufacturing even less competitive.

The US may not have anticipated that years of effort would culminate in China's thriving chip industry, now expanding globally. The US, once accusing others of isolationism, is now adopting similar measures to protect its chip companies. It can be said that the US has only brought this situation upon itself, lifting a rock only to drop it on its own feet.