US chip export restrictions could hobble China’s semiconductor goals
The U.S. government has introduced some of its most sweeping export controls yet aiming to cut China off from advanced semiconductors. Analysts said the move could hobble China’s domestic chip industry.
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China’s ambitions to boost its domestic chip industry has likely become magnitudes more difficult and costly after the U.S. launched some of its most wide-ranging export controls related to technology against Beijing.
On Friday, the U.S. Department of Commerce introduced sweeping rules aimed at cutting China off from obtaining or manufacturing key chips and components for supercomputers, in what is seen as a huge escalation in tensions between Beijing and Washington in the technology sphere.
America argues that such advanced semiconductors can be used by China for advanced military capabilities.
“There is no going back to the way things were,” Abishur Prakash, co-founder of the Center for Innovating the Future, an advisory firm, told CNBC.
“With the latest action, the chasm between the U.S. and China has now expanded to the point of no return.”
Here are some of the highlights of the new U.S. rules:
- Companies require licenses to export high-performance chips, usually designed for artificial intelligence applications, to China.
- Even foreign-made chips related to AI and supercomputing, that use American tools and software in the design and manufacturing process, will require a license to be exported to China.
- U.S. companies will be heavily restricted in exporting machinery to Chinese companies that are manufacturing chips of a certain sophistication.
“The latest chip rules are a sign that Washington is not trying to rebuild relations with Beijing. Instead, the U.S. is making it clear that it’s taking this competition more seriously than it ever has, and is willing to take steps that were once unthinkable,” Prakash said.
What impact will U.S. restrictions have on China?
Semiconductors are some of the most important technology products. They go into everything from smartphones to cars and refrigerators. But they’re also seen as key to military applications and advancing artificial intelligence.
As geopolitical tensions between China and the U.S. have ramped up in the past few years, technology, and in particular sensitive areas like chips, have been dragged into the battle.
Artificial intelligence, quantum computing and semiconductors are all areas China has identified as “frontier” technologies it wants to boost its domestic capabilities in. But the new U.S. rules will make that extremely hard, particularly in the area of chips.
“The U.S. has formally shifted its goal from outpacing China in the semiconductor industry to actively denying it access to advanced chips,” Pranay Kotasthane, chairperson of the high tech geopolitics program at the Takshashila Institution, told CNBC.
“China’s homegrown chip sector will be hobbled by these extensive controls.”
The nature of the supply chain
The reason why the U.S.’s export controls could be…
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