0:00

Remember a few years back when the U.S.

0:02

had a trade war with China, and it was harder

0:04

and more expensive to get everything from washing

0:06

machines to solar panels to soybeans?

0:09

Well, that war never ended, and this

0:12

week, a new front opened up. China

0:14

started restricting the export of two rare-earth

0:17

materials called gallium and

0:19

germanium. Now, these metals that China

0:21

has are materials used in

0:24

semiconductor chips. Last fall,

0:26

the U.S. said it would stop selling

0:28

advanced semiconductor chips to China,

0:31

and it would stop selling the technology

0:33

to make those chips. These chips are

0:35

in everything, including artificial

0:38

intelligence.

0:38

We're going to cut off this entire ecosystem

0:41

and kill China's ability to create advanced technology.

0:44

Coming up on Today Explained, a war over chips,

0:47

the little thing that's in everything.

0:58

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1:24

Britney Spears fans are just happy she's finally free from that conservatorship.

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There's

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see as abnormalities or oddities or glitches in some

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of her posts. There's theories that she's been replaced

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with A.I. or a body double or clone. The

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Britney Spears conspiracy theory and what it says about

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fandom.

1:51

This week on Intuit,

1:53

Vulture's pop culture podcast.

2:10

It's Today Explained. I'm Noelle King. For

2:13

most of us, this week's blockade

2:16

on germanium and gallium went

2:18

unnoticed. There are no gallium shortages

2:20

at the Trader Joe's. But Alex W.

2:23

Palmer saw this coming. Alex is a contributing

2:25

writer at the New York Times Magazine, and he

2:28

recently wrote a piece called An Act of War

2:30

Inside America's Silicon Blockade

2:32

Against China.

2:34

Blocking germanium and gallium

2:37

is China's latest salvo in

2:39

what has become a technological war fought

2:42

on the battlefield of chips.

2:47

So last October 7th, the US

2:49

took what was to that point the most extreme

2:52

and drastic step, which was curbing

2:55

through a variety of means,

2:58

chips, chip components,

3:01

basically anything along the supply chain that China

3:03

could use to make advanced semiconductors that

3:05

could power AI, that could power future weapons systems,

3:08

could power surveillance. The US

3:11

unilaterally cut those off from China. With

3:13

regard to China, there are certain extremely

3:15

sophisticated semiconductors

3:16

that we have built that are useful

3:19

for nuclear and or other weapons systems.

3:22

Those we are not selling, we're not

3:24

exporting to China or anyone else. And

3:27

for a few months, it seemed like China was not really going

3:29

to respond, at least not forcefully, you

3:32

know, immediately after these October 7th measures.

3:34

You saw some statements from China about this being sort

3:36

of technological hegemony and how

3:39

the US shouldn't abuse its position. A case

3:41

was taken to the WTO.

3:43

The so-called request for consultations

3:45

is the first step in a long procedure

3:47

at the global trade body. But it seemed for a while

3:49

like the US's idea

3:52

of the case that China just had a weak hand when

3:54

it comes to chips and that this was what the US was

3:56

trying to leverage its dominance in the semiconductor

3:58

supply chain that China could use to make a better economy.

3:59

China just didn't have a lot of options. But

4:02

what China has done is dominated the rare earths

4:04

industry, which includes germanium and gallium,

4:06

that all these sort of unique,

4:09

sometimes hard to find, but actually sometimes not that

4:11

rare, ironically, but also very

4:13

expensive and polluting to produce, this

4:16

whole industry, China, has really made a concerted

4:19

effort to dominate.

4:28

So China's export controls on gallium

4:31

and germanium are a response to

4:33

the United States instituting a blockade

4:35

on China. The American blockade

4:38

was aimed at preventing China

4:40

from

4:41

doing or getting what exactly?

4:43

By the logic of the Biden administration, this is purely

4:46

a national security imperative

4:48

that these advanced chips are used

4:50

to power AI models that help China

4:53

modernize its military and help create

4:56

the surveillance state. The databases

4:58

and surveillance centers in Xinjiang province

5:00

in the West, those are all run on American

5:03

chips, which of course is a pretty startling thing

5:05

because that was, at least for

5:07

the administration, one of the impetuses behind

5:10

the October 7th measures was saying, we

5:12

don't want these tools to be used against

5:14

us. We don't want these tools that we've created that

5:16

took decades of research, tens

5:18

of billions of dollars for American companies

5:20

to create for these to be then used for human rights

5:22

abuses or worst

5:25

case scenario, someday teaching a missile

5:27

how to shoot Americans on a battlefield. That

5:29

is what the Biden administration was trying to

5:31

prevent with these measures. It's saying

5:33

that the US-China relationship

5:35

has fundamentally changed, that for decades,

5:38

we had sort of been okay with China

5:41

advancing technologically as

5:43

long as the US stayed ahead. And what

5:45

the US had decided, the Biden administration had decided,

5:47

is that that's no longer enough. So

5:50

you could see this in a speech that Jake Sullivan had

5:52

given last September just before the restrictions

5:54

came out. And he was saying that the US had

5:56

had a policy, sort of an unspoken policy,

5:59

remaining two generations ahead of China on

6:02

advanced technology or ahead of any adversary

6:04

on advanced technology. We seem to take

6:06

for granted that our technological advantages

6:09

were somehow permanent and invincible.

6:12

We did not fully grasp that those advantages

6:14

must be prized,

6:16

preserved, and renewed.

6:18

It's a little bit of a wonky process.

6:21

It goes deep into the weeds of sort

6:23

of technical minutia and bureaucratic

6:25

jargon. There's different

6:27

restrictions depending on what the end use of the

6:29

chip is, depending on who the end user

6:31

is, depending on where it's produced. You

6:34

know, if it's using a certain kind of American technology

6:36

or knowledge, it's really multilayered. And

6:38

the point was, one, to be surgical

6:41

about it because they're only trying to cut off really the

6:43

most advanced chips. You know, the ones

6:45

that power AI that help create

6:47

something like chat GPT.

6:48

The technology, known as

6:50

a chatbot, is only one of

6:53

the recent breakthroughs in artificial

6:55

intelligence, machines that can

6:57

teach themselves superhuman skills.

7:00

But really, this is only affecting about like the top

7:03

one or two percent of the market. It's really

7:05

the extreme cutting edge. But the

7:07

Biden administration feels that because chips are

7:09

so fundamental, what

7:12

Sullivan called a force-multiplying technology,

7:14

and

7:15

because we don't know where they're going yet, right,

7:17

this is still sort of a nascent field.

7:19

Who knows where AI is going

7:21

to go, where supercomputing is going to go,

7:23

where quantum computing is going to go, that

7:26

the ramifications are so potentially

7:29

so extreme that the U.S. needs to make sure

7:31

it has not just a couple generations

7:33

lead, but the largest lead possible,

7:36

not just cut China off at the knees from

7:38

this future of advanced technology, but actually

7:40

force them to regress.

7:42

What is a semiconductor chip? What are

7:44

these things? Yeah, this is this is one of the things

7:46

that's so fascinating about it is these are technological

7:49

miracles.

7:51

Semiconductors, the little

7:54

heroes of big innovation.

8:00

Hey mister, what's that thing in your

8:02

hand? Well son, this little

8:04

device is called a semiconductor. That

8:07

sounds boring, who cares about that? Well

8:10

this tiny little chip is far from boring.

8:12

Say, you like playing games on your iPhone,

8:15

don't you? Well I sure do, but

8:17

I could play Minecraft just about all day.

8:20

Well without semiconductors, there wouldn't

8:22

be any Minecraft for you to play. There

8:24

wouldn't even be an iPhone. In fact, there

8:27

wouldn't even be an internet without all these

8:29

tiny little

8:29

microchips. You mean those little things can

8:32

do all that? I don't believe

8:34

you. The internet comes from the sky,

8:36

not from some dumb piece of plastic.

8:40

It's called silicone, son. At

8:43

their most basic level,

8:45

they're quite simple. They're just tiny pieces

8:48

of silicon

8:49

and then carved with transistors.

8:52

So a transistor is just a little switch. It

8:54

can go on and off. If it's on, there are

8:56

electrons flowing. If it's off, there's not

8:58

electrons flowing. This is what creates the

9:00

ones and zeros of binary language for computing.

9:03

When these were first created in the late 1950s, they

9:06

were carving these transistors by hand. There

9:08

were just a couple on a chip. You could see it with your

9:10

eyes. And in just the span

9:13

of what, six decades now, there are,

9:15

in the newest iPhone, the largest chip

9:17

in that phone has maybe 20 billion transistors,

9:20

which are the size of a virus, which

9:22

is just incredible. These are scales

9:25

at which humans can't even see, but somehow

9:27

we've made machines that can spit

9:29

these off the assembly line to the order

9:31

of billions of these a year, which is just absolutely

9:34

incredible. And that's what has allowed modern

9:36

life to sort of keep moving forward.

9:37

Where do the materials to make these chips come from?

9:40

So they come from all over the world. So,

9:42

mister, where do these super-compunctors

9:46

come from anyway? Semiconductors,

9:49

son. They're called semiconductors. And

9:52

they're made in countries all over the world.

9:54

Let me show you. Better hold on

9:56

tight.

9:59

Now look down there son. Where

10:02

are we? What is that? I'm

10:04

scared. This is a place called

10:07

the Netherlands. Wow. Now

10:09

you see all those people down there? They're

10:11

just doing one part of the process that

10:14

makes semiconductors. Neat ho

10:16

mister. Now hold on tight. There

10:18

are a lot more countries that we need to visit and

10:21

it's about a 26 hour flight to Taiwan.

10:24

Oh, okay.

10:29

We are obviously in an age where globalization

10:31

has gotten a bad name. The future does

10:33

not belong to globalists. I'm not

10:35

going to be a globalist. You're either a nationalist

10:38

or you're a globalist. The globalist can

10:41

all go to hell. I have come

10:43

to Texas. But

10:45

the semiconductor industry defeats

10:48

it's been able to achieve our really thanks to globalization.

10:54

This has been a whole of world effort

10:56

with intense specialization across regions

10:59

and even across companies. So you have

11:01

Taiwan plays an important role. TSMC

11:04

is one of the largest semiconductor manufacturers

11:07

in the world. Netherlands plays a crucial role.

11:10

TSMC cannot make its chips without

11:13

a $150 million dollar machine from

11:15

a Dutch company called ASML.

11:17

Japan plays an important role at a certain step. Watching

11:19

gas is a key material for fabricating

11:22

semiconductor circuits and Japanese

11:24

suppliers account for more than 70 percent

11:27

of the global market.

11:28

The U.S. really though is the linchpin. For

11:30

years, Intel technicians have been making PCs

11:32

smarter. Now they face their greatest

11:34

challenge ever. Hey, no

11:36

one messes with my brain. This is the place where

11:39

chips were invented and that holds

11:41

really choke points across several key

11:43

steps of the supply chain.

11:46

All of a sudden everybody started to learn the

11:48

phrase supply chain. A

11:50

year ago no one knew what the hell everybody was talking about

11:52

when they said supply chain. But now they all

11:55

know. And we lost access to

11:57

these semiconductors.

12:00

all three of the main companies that do the most

12:02

advanced software. Those are all American companies,

12:05

or they are based in the US, which gives

12:07

the US government leverage over them. Everybody

12:09

else designs the chips, gets them ready

12:11

to go, and then you send them to Taiwan, and Taiwan is one

12:13

who actually makes those chips. They

12:16

can just do things that no one else can do, because so

12:18

much of making chips has been the accumulation

12:21

of knowledge, sort of implicit process

12:23

knowledge across decades. You can't

12:25

sort of put these things on a blueprint and just turn

12:27

them on and make them work. It takes really knowing

12:30

the machine and working with it constantly.

12:32

These materials come from everywhere, which is

12:35

what gives the Biden administration power,

12:38

because it is a series of choke points. If you just

12:40

squeeze on those little spaces, it

12:42

gives you enormous leverage, and that's what the Biden administration

12:44

is trying to do, and that's what now China is trying to respond

12:46

with, is saying, hey, we have our own choke

12:48

points, we can squeeze them too, see what happens. And

12:51

this is where rare earth comes in. Do

12:53

you know what rare earth is, son? No,

12:55

I mean, I just learned what a semiconductor is.

12:58

Rare earths like germanium

13:00

and gallium are integral to the creation

13:02

of semiconductors. So semiconductors

13:04

are made of earth?

13:05

Like dirt? No,

13:07

no, no, no. Try to keep up here, son. This

13:09

is an important lesson in supply chain economics.

13:12

You see, when these places mine, they're in the period.

13:16

Okay, so gallium and germanium, these

13:18

things that China says it will no longer export

13:20

to the U.S., they're part of the equation. They go into

13:22

the semiconductor chips?

13:24

They do. So they're important in the manufacturing

13:26

process. And China,

13:28

as part of a broader strategy across the

13:30

last several decades to dominate rare earths,

13:33

really has a dominant position in germanium

13:35

and gallium. It's something like 60 and 90

13:38

percent, respectively, are made or

13:40

brought to finished use by China and

13:42

then shipped abroad to countries like Japan,

13:44

the Netherlands, Germany, the U.S., which then use

13:47

them in the semiconductor supply chain.

13:53

This move by China to curb

13:56

gallium and germanium, this is sort of a warning

13:59

shot.

13:59

This is them showing the U.S., showing other Western

14:02

countries that eventually joined on to the restrictions,

14:04

that if you keep pushing on this, we have our

14:06

own tools and we can hurt you as well.

14:16

In a moment, Alex W. Palmer will

14:18

return to tell us why, for the time

14:21

being, there is no way out of the

14:23

war for semiconductor chips.

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16:26

When we left off, Alex W. Palmer, contributing

16:28

writer, New York Times Magazine, was explaining

16:31

how two metals, gallium and germanium,

16:33

represent a new front in a war over

16:35

technology that the U.S. and China are fighting.

16:38

Each country is trying to prevent the other from making

16:41

semiconductor chips. But why

16:43

do we need to fight this war? Alex,

16:45

why can't we just each make our own

16:47

stuff? It was

16:48

to some extent in the way that the

16:51

industry has been structured up to now, because

16:53

it was such a globalized industry. So

16:55

the U.S. had something to bring, you know, the expertise,

16:58

the technology, and China had something

17:00

to bring, which was a huge market,

17:02

huge demand. So to this point, it has been

17:04

a sort of symbiotic relationship,

17:07

both as, you know, the whole supply chain

17:10

across the globe and the U.S. and China. You

17:12

know, semiconductors are one piece of this larger story

17:14

of the changing perceptions of

17:16

the U.S. and China relationship,

17:18

that engagement, economic

17:21

engagement especially, had been seen as sort of a win-win

17:23

situation. And now both sides,

17:26

but it

17:26

seems like starting with the Biden administration on chips,

17:28

are reevaluated that and wondering,

17:31

can we be dependent on this other country?

17:33

Can we trust them? And certainly the answer seems

17:35

to be no right now. And now the question is,

17:38

as we start to try to

17:40

cut these dependencies, whether

17:42

that's actually going to work. So I hear

17:44

you saying that the U.S. move to

17:47

cut China off is both an economic

17:49

move and a national security move?

17:51

Yes, the Biden administration wants to say that this

17:53

is just a, you know, sort

17:56

of blocking military modernization and

17:58

it will have that effect, but it will in

17:59

inevitably also have spillover effects into

18:02

the wider economy. And I don't doubt that the

18:05

Justifications are national

18:07

security and human rights, but because chips

18:09

are such a fundamental technology It

18:11

is inevitably an economic move as well,

18:14

right? Because AI is not just

18:16

used for the military Chat GPT is

18:18

not a military weapon, but it was powered

18:20

by chips that China is now prevented from

18:22

having according to October 7th Imagine

18:25

if tomorrow Saudi Arabia cut off

18:27

all oil exports to the US and

18:30

said look oil is used in fighter

18:32

jets It's used in bombers. It's used

18:34

in tanks.

18:35

This is purely a military move You

18:37

know, we're just trying to stop America

18:39

from using its military in irresponsible ways Okay,

18:42

that's true But oil is so

18:44

fundamental that it also goes into almost every

18:46

other part of the economy as well So by cutting

18:49

it off just for military uses you're also cutting

18:51

it off for everybody else as well And it's the

18:53

same with chips, right that an advanced

18:55

ship can be used to train AI to

18:58

shoot a hypersonic missile better but it can

19:00

also be used to try to Identify

19:03

cancer more quickly or develop new drugs or

19:05

you know develop new crops Those are

19:07

all things that AI can also be used for and

19:10

this is the piece of it That I

19:12

think China is most upset about and that

19:14

the Biden administration is trying to sort of massage

19:16

and keep keep the spotlight on No, this

19:18

is about weapons about human rights It's

19:20

not intended to benefit American companies.

19:23

All right, so China says in response to this We're

19:25

gonna block certain materials from entering into

19:27

the US Any other

19:30

response it seems rather

19:32

muted. It seems like China could have gone

19:34

bigger Yeah, it was a pretty muted

19:37

response and this seemed to be at first

19:39

sort of vindication of the Biden administration's

19:42

Logic on this that look China just

19:44

does not have a strong hand. China

19:46

is

19:47

Extremely dependent on the US for

19:50

chips that they really don't have any leverage here

19:52

But you also then had you know, China

19:54

showing

19:56

Showing the US that it had pain points

19:58

to that there were places it could squish So,

20:00

for instance, you had an American company, Micron.

20:03

Micron is essential to

20:05

the world's most inspiring innovations.

20:09

Which makes semiconductors. That

20:11

was put under national security investigation

20:14

and then, not surprisingly, found

20:16

soon after by the Chinese government to be sort of untrustworthy.

20:19

And so Chinese companies, especially tied to

20:21

the government, cannot or should not use

20:24

that company. That's going to be a huge blow

20:26

to Micron's revenue.

20:27

It was only two months ago that China's

20:29

cybersecurity regulators said that they were going

20:31

to review Micron and now they've said that

20:33

they're restricting network and infrastructure-related

20:36

memory chips made by Micron. You

20:38

also had other

20:41

pieces of the supply chain where China was sort

20:43

of showing where it had some leverage. And now,

20:46

as you'd said, going into effect August

20:48

1st, the most extreme so far has been

20:50

the export controls on germanium and gallium.

20:53

Because the world is dependent on China for these

20:55

materials. And if they really want to,

20:58

if they really want to squeeze, they can send prices soaring. They

21:01

can send companies scrambling

21:03

to find other places to produce these minerals. And

21:05

so far, there aren't any. But what's difficult

21:08

about this entire dance for the US and for China

21:11

is that for these two minerals,

21:14

the more China squeezes, the more it hurts itself too.

21:17

Because it also needs the revenue

21:20

from selling these items abroad to continue

21:22

powering its own industry. And this is the

21:24

same with the US of, okay, yeah, you

21:26

can squeeze China, but does that end up hurting us

21:28

more? And because it is, again, such

21:31

a globalized industry, yeah,

21:33

you have a lot of leverage over everybody else. But every time

21:36

you hurt them, you're also hurting yourself to some extent. And

21:39

so that's what everyone's really trying to fine-tune right

21:41

now is, okay, how can we exert maximum

21:43

paint on them? Or the biggest

21:45

possible warning shot without hurting ourselves. And

21:48

that's going to be tough because the industry

21:50

is incredibly interdependent. And everybody

21:52

is scrambling now to sort of friend shore and

21:55

find alternative sources for everything. But

21:57

it takes billions and billions and billions of

21:59

dollars. and decades of research to get to

22:01

the real cutting edge of this stuff. And you can't just

22:03

do that overnight.

22:04

So all of this is happening because the US

22:07

and China are so linked. That's how the

22:09

global economy works. Is any

22:11

of this raising a conversation within

22:14

the American government about whether or not it

22:16

would be wise for the US to decouple

22:18

from China?

22:19

Definitely. And I think decoupling

22:21

was a hotter term a few months ago. Now it's

22:23

moved on to sort of de-risking, whether

22:26

China sees any difference in that,

22:28

you know, change of language remains to be

22:30

seen.

22:36

I think partly what the Biden administration is trying

22:39

to do with these measures

22:41

is to silence some of the more extreme

22:44

critics who want something like decoupling,

22:46

which would be even

22:48

more difficult, obviously. Incredibly painful

22:51

for American consumers and for the global

22:53

economy. But there is a feeling

22:55

among some that that might be

22:57

inevitable, that that might be necessary. And

23:00

what the Biden administration is trying to do is say like, no,

23:02

look, we can be more surgical about this. We

23:04

can be precise. We can show exactly

23:06

what we can depend on China

23:08

for and what we can't. And chips are one

23:11

of the things where we can't. So we can take action

23:13

to cut off that vulnerability.

23:34

Well,

23:35

son, I hope you understand now that

23:37

these little semiconductors may

23:39

look boring. They sure do. But are an important

23:41

part of what makes up the world around

23:44

us.

23:44

I do, mister. Without semiconductors,

23:47

we wouldn't have computers. That's right. Or phones.

23:49

Mm-hmm. Or cars or planes

23:52

or washing machines or microwaves

23:55

or... Okay, okay, okay,

23:57

son. You're right. They power all

23:59

of these... and more. And who knows

24:01

what the future holds for semiconductors. They

24:04

just might create the technological wonders

24:06

that could solve the world's most complex

24:09

problems.

24:11

Or doom us all.

24:26

Today's episode was produced by Vermont Bureau

24:28

Chief John Aarons, who you also heard doing

24:31

some many voices. It was edited

24:33

by Amina El Saadi. Michael Rayfield is

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our engineer and Laura Bullard is our fact checker.

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The rest of the team includes Siona Petro, Salima

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Shah, Hadi Muaghty, Miles Bryan, Amanda Llewellyn,

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and Abishai Artsy. My co-host is Sean

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I'm Noelle King. And it's Today Explained.

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Today's Episode is brought to you by the Vox Media Podcast Network.