Thread by @thomasdggeddes

This is what PKU Prof. Lu Feng (路风) was saying in January about foreign companies such as #ASML complying with US #chip export controls.

EXCERPTS 🧵

1⃣ “Since the #USA has used its ‘nuclear weapon’ against China, we should strike back and use our own ‘nuclear weapon’. More specifically, the US’s method of suppressing 🇨🇳 is to control the supply of chips. Well then, [in return], 🇨🇳 should and can control the demand for chips.”

2⃣ "If the US is forcing a tech and industrial #decoupling [from #China], then we should impose sanctions on all the foreign companies that are carrying out these orders to decouple from the Chinese market.”

3⃣ “The US’s ‘nuclear weapon’ is technology and #China’s ‘nuclear weapon’ is its market. A “nuclear weapon” versus a “nuclear weapon” – who is afraid of whom? ->

-> If you have a market, but no technologies, you can [still] develop technologies. If you have technologies, but no market, then [having such] technologies will end up leading you nowhere.”

4⃣“Dutch lithography giant #ASML’s main [source of] revenue comes from its mature process DUV lithography machines, not from its most advanced ones. The US is currently asking its own companies to stop supplying high-end chip-making equipment to China. It is also demanding that->

-> its allies take part in the containment [围堵] of the 🇨🇳 [#tech] industry. However, ASML is currently not agreeing. If companies from the US and from other countries allied to the US were to do this, it would be equivalent to the US choking off supplies from companies that ->

-> are part of #China’s chip industrial chain. So why don’t we choke the demand off those companies [too]?”

5⃣ “We must not be afraid to return to a ‘peace of terror’. We could demand that sales to the Chinese market of any company that [helps] implement the US’s sanctions against China be subject to investigations by the Chinese government. ->

-> This way they will need to think twice about being an accomplice to the #UnitedStates. It is the other party that struck the first blow and imposed sanctions on China, it is not China that is infringing on any free trade.”

6⃣“#ASML’s third quarter 2022 financial report shows that its largest sales come from its mature DUV [lithography equipment], incl. ArF and KrF [lasers]. The sales from its most advanced EUV lithography machines are very small, however its sales volume should not be belittled.”

7⃣ “If #ASML wants to follow the US’s policy and stop exporting its most advanced lithography machines to China, we could, after implementing reciprocal sanctions, ban [封杀] the sale of its ordinary lithography machines [普通光刻机] to the [Chinese] market."

8⃣ “For instance, for any foreign company that sanctions China in the tech field, [we should] implement controls on their orders [对其订单实施管制]. At the same time, we must remain steadfast in developing China's domestic IC supply chain.”

9⃣ “If China were really to do this, it would allow areas in which we have shortcomings, such as #semiconductor manufacturing equipment and materials, to develop [faster]. All we are missing now is for the Chinese government to make up its mind and take a decision. ->

-> If we build up our industrial base, who will be most afraid then? It will not be the Chinese who are afraid, but the Americans.”

🪧 As always please remember that this is a scholar talking, not a policymaker. How much influence Lu has in #Beijing is anyone's guess.

For more on Lu's background and policy recommendations, see here:

sinification.substack.com/p/us-china-chi…