AILSA CHANG, HOST:
The Trump administration has opened a new front in its battle for technological superiority with China. It's barring companies from supplying computer chips to the Chinese telecom behemoth Huawei, and caught in the middle is a Taiwanese company trying to keep all sides happy. NPR international affairs correspondent Jackie Northam reports.
JACKIE NORTHAM, BYLINE: There was great excitement recently at the State Department after the Taiwan Semiconductor Manufacturing Company, TSMC for short, announced it would build a $12 billion computer chip facility in Arizona. State Department spokesperson Morgan Ortagus.
(SOUNDBITE OF ARCHIVED RECORDING)
MORGAN ORTAGUS: The TSMC deal is a game changer for the U.S. semiconductor industry that will bolster American national security and our economic prosperity.
NORTHAM: TSMC is a giant in the world of computer chip manufacturing.
PAUL TRIOLO: They take designs from other companies, and they build very cutting-edge, advanced semiconductors for just about everything you can think of - cameras, smartphones, computers. They sort of pioneered this industry.
NORTHAM: Paul Triolo focuses on the intersection of politics and technology at the Eurasia Group. He says TSMC has a low profile but is an integral part of the global supply chain for computer chips.
TRIOLO: They supply lots of U.S. companies - Apple, Qualcomm - and then the leading players in China like Huawei and other AI companies.
NORTHAM: But one day after TSMC announced the Arizona plant, the Trump administration delivered a blow, saying that any chip maker around the world that uses U.S. technology - including TSMC - is banned from supplying Chinese telecom powerhouse Huawei or any of its entities. Adam Segal directs a digital and cyberspace policy program at the Council on Foreign Relations in New York. He says the new regulations put TSMC in a tough position.
ADAM SEGAL: They are right in the crosshairs for U.S.-China technology competition. And, you know, it doesn't want to have to choose and has always wanted to be able to supply customers on both sides of that.
NORTHAM: James Lewis, a cybersecurity specialist at the Center for Strategic and International Studies, says the new regulations mean the U.S. has found a way to critically undermine Huawei.
JAMES LEWIS: Huawei depends on TSMC for chips. China can't make advanced chips. The dilemma for them is to make chips, you need access to American technology. So the administration has found a choke point, and they're starting to squeeze it.
NORTHAM: The new regulations stiffen earlier sanctions. It's all part of a larger effort by the Trump administration to tighten the screws on Huawei. To the Chinese, the mobile telecom equipment company is something of a national treasure. To the U.S., it's a national security concern, says Lewis.
LEWIS: I've been watching Huawei for about 20 years. They have their roots in the Chinese intelligence service. They've got tremendous support from the government.
NORTHAM: Eurasia Group's Triolo says there is evidence that Huawei engages in questionable business practices such as IP theft but says so far, there's no evidence of a smoking gun when it comes to Huawei acquiring intelligence for Beijing.
TRIOLO: I think the real issue underlying this is concern within the Trump administration about Huawei's dominance of 5G and its next-generation mobile architecture. They dominate us globally. So one - at one level, you know, trying to cripple Huawei is driven by this desire in the administration to sort of slow down Huawei's dominance of 5G.
NORTHAM: Triolo says there is little question China will retaliate in this ongoing high-tech battle between the two countries.
Jackie Northam, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
