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US Sanctions on Russia Serve China a Sharp Reminder of Need for its Own Chips

A man visits a display of semiconductor devices at Semicon China, a trade fair for semiconductor technology, in Shanghai, China March 17, 2021. (Reuters)
A man visits a display of semiconductor devices at Semicon China, a trade fair for semiconductor technology, in Shanghai, China March 17, 2021. (Reuters)
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US Sanctions on Russia Serve China a Sharp Reminder of Need for its Own Chips

A man visits a display of semiconductor devices at Semicon China, a trade fair for semiconductor technology, in Shanghai, China March 17, 2021. (Reuters)
A man visits a display of semiconductor devices at Semicon China, a trade fair for semiconductor technology, in Shanghai, China March 17, 2021. (Reuters)

The sweeping restrictions imposed on Russia to block its access to global exports of goods from chips to computers and electronics are likely to accelerate China's own push for self-reliance in the semiconductor industry, analysts said.

Following Russia's invasion of Ukraine on Thursday, Washington - as part of a package of measures - announced export restrictions which will force companies making high- and low-tech items overseas with US tools to seek a license from the United States before shipping to Russia.

China, like Russia, lacks advanced chip manufacturing capacity but one of its top long-term policy goals is to establish independence and self-reliance in the semiconductor industry.

The importance of such self-sufficiency became apparent when Huawei Technologies Co Ltd's smartphone business collapsed following sanctions on the company imposed by the US in 2019 that cut off much of its overseas chip supply and effectively barred it from building its own.

One chip consultant in China, who requested anonymity due to the sensitivity of the topic, said China will likely "watch and learn" from the sanctions and their impact on Russia.

"The Russians have a failed chip industry and rely on global semiconductors. So if there are technology issues that come out during the 'non-invasion' from sanctions, it reinforces Beijing's desire to own the technology for itself."

Washington further hobbled China's plans for tech supremacy by expanding sanctions to include the country's top chipmaker Semiconductor Manufacturing International Corp (SMIC) in 2020.

SMIC was forced to abandon plans to manufacture some types of advanced chips when the US revoked an export license for Dutch lithography machine maker ASML Holding NV.

Over the past ten years, China, the world's largest importer of chips, has poured funding into semiconductor projects as part of the "Made in China 2025" initiative, which calls for 70% self-sufficiency in core components for critical technologies by the middle of the decade.

Its chip industry is growing fast, thanks to venture capital funding and political incentives. But the country's global share of chip exports remains marginal - its fabless chipmakers occupy about 16% of global market share, according to the semiconductor Industry Association.

That also limits how much China can do to aid a heavily-sanctioned Russia.

"China alone can't supply all of Russia's critical needs for the military," a senior US administration official said.

"China doesn't have any production of the most advanced technology nodes. So Russia and China are both reliant on other supplier countries and of course US technology to meet their needs."

China shipped approximately $10 billion worth of electronics to Russia in 2020, according to UN Comtrade data, accounting for roughly 20% of its total exports.

Smartphone shipments account for a large chunk of that as Chinese brands such as Xiaomi Corp and Realme are among top-sellers in Russia.

"Russia's chip consumption is not big and more than half is probably from China already," said Doug Fuller, who researches China's technology policy at the City University of Hong Kong.

"China may pick up an extra $200 million in exports approximately if chips from elsewhere are completely cut off, and some of the chips Russia needs China can't make anyway."

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Technology

Meta Unveils Cheaper VR Headset, AI Updates and Shows off Prototype for Holographic AR Glasses

Meta CEO Mark Zuckerberg wearing glasses (Reuters).
Meta CEO Mark Zuckerberg wearing glasses (Reuters).
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Meta Unveils Cheaper VR Headset, AI Updates and Shows off Prototype for Holographic AR Glasses

Meta CEO Mark Zuckerberg wearing glasses (Reuters).
Meta CEO Mark Zuckerberg wearing glasses (Reuters).

Meta unveiled updates to the company's virtual reality headset and Ray Ban smart glasses on Wednesday as it tries to demonstrate its artificial intelligence prowess and the next generation of computing platforms beyond smartphones and computers.
CEO Mark Zuckerberg also showed off Orion, a prototype he called “the most advanced glasses the world has ever seen.”
“The technical challenges to make them are insane,” Zuckerberg told a crowd of developers and journalists at Meta's Menlo Park, California, headquarters. The holographic augmented reality glasses, for one, needed to be glasses — not a bulky headset. There are no wires and they have to weigh less than 100 grams (3.5 ounces), among other things. And beyond interacting with your voice, typing or hand gestures, Orion has a “wrist-based neural interface” — it lets you send a signal from your brain to the device, using a wristband that translates nerve signals into digital commands.
There is no release date for Orion — Zuckerberg called it a “glimpse of the future.”
Seemingly in his element speaking to a cheering crowd, Zuckerberg said Meta is working to “bring the future to everyone” with its headsets, glasses and AI system. As part of an update to its Llama model, people will now be able to interact with Meta AI by speaking, with voices from celebrities such as John Cena, Judi Dench and Awkwafina.
“We are trying to build a future that is more open, more accessible, more natural, and more about human connection," Zuckerberg said. ”This is the continuation of the values and ideas that we have brought to the apps and technology that we have built over Meta’s first 20 years.”
An AI update aimed at influencers allows them to craft AI versions of themselves — for interacting with fans. On the keynote stage, an AI version of creator Don Allen Stevenson III appeared on the screen and answered a few questions just as the actual creator would. When Zuckerberg asked the AI creator about cattle ranching, it responded “my expertise lies in technology and design, not agriculture.” An earlier version of this tool was text only.
Other AI updates include live translation, which Zuckerberg demonstrated on stage. While wearing the smart glasses, Zuckerberg spoke in English to Mexican mixed martial artist Brandon Moreno replying in Spanish — the conversation was translated in real time. People can also dub their videos in another language so that it looks like they are speaking natively — even going so far as changing their lips movements to match.
Meta AI now has 500 million users, the company said. Jeremy Goldman of the research firm Emarketer called the number “jaw-dropping.”
“Meta has transformed from just a social media company into an AI powerhouse. Zuckerberg’s move to celebrity voices is not just for fun — it’s a direct challenge to OpenAI, with an emphasis on real-world utility," Goldman said.
Meta, which introduced the Quest 3 last year, also showed off a cheaper version of the VR goggles — the 3S — that will cost $299. The regular Quest 3 costs $499. The S3 will start shipping on Oct. 15.
“Meta is aggressively undercutting Apple’s Vision Pro to dominate the middle-tier AR/VR market,” Goldman said. Those VR goggles, which came out earlier this year after much anticipation, cost $3,500.
While VR goggles have grabbed more headlines, the augmented reality Ray Bans turned out to be a sleeper hit for Meta. The company hasn't disclosed sales numbers, but Zuckerberg said during Meta's July earnings call that the glasses “continue to be a bigger hit sooner than we expected — thanks in part to AI.” Zuckerberg said on Wednesday that Meta seems to have gotten past the supply issues that plagued the Ray Bans a few months ago due to high demand.
“They are kind of the perfect form factor for AI,” Zuckerberg said. The glasses, he added, let an AI assistant “see what you see, hear what you hear” and help you go about your day.
For instance, you can ask the glasses to remind you where you parked or to pick up groceries, look at a pile of fruit and come up with a smoothie recipe, or help you pick out a party outfit.
Meta — which renamed itself from Facebook in 2021, still makes nearly all of its money from advertising. In its most recent quarter, 98% of its more than $39 billion in revenue came from ads. At the same time, the company is investing heavily in AI and what Zuckerberg sees as the next generation of computing platforms such as VR headsets and AR glasses.
“VR headsets, despite Meta’s assertion, will not go mainstream," said Forrester research director Mike Proulx. “They’re too cumbersome, and people can only tolerate them in short bursts.”
Glasses, on the other hand “put computing power directly into a common and familiar form factor. As the smart tech behind these glasses matures, they have the potential to disrupt everyday consumers’ interactions with brands.”
Proulx said the Orion prototype "sets the stage for a future where a revolutionary 3D computing platform is within reach and can actually be useful to the everyday consumer.”