Chinese tech giants are starting to feel the heat from Washington’s latest export control measures targeting the the communist country’s semiconductor industry.
The US Department of Commerce last week passed a new set of export control regulations intended to slow down China’s growing dominance in technology and military advancements. The new measures are an expansion of Washington’s foreign direct product rule, which was initially used to broaden the US government’s control of semiconductor exports to Huawei Technologies, and later to stem the flow of chips to Russia following Moscow’s military operation in Ukraine.
The new broadened rules, which Democratic leader Chuck Schumer said will “protect our country’s innovations from China’s predatory actions,” aim to prevent foreign firms from selling semiconductors to Chinese companies, as well as stop them from exporting the necessary tools Chinese firms could use to produce their own advanced chips. In addition, Biden’s regulations also seek to halt shipments of various chips used in Chinese supercomputing systems, some of which are used to create nuclear weapons and other military technologies.
China, in response, slammed Washington’s new regulations, and warned the move will only add further stress on already-strained global supply chains. “Not only will such unilateral measure harm the further global supply chain of the semiconductor industry, more importantly it will create an atmosphere of uncertainty, which will negatively affect the trust, goodwill, and spirit of cooperation that the players of the global semiconductor industry have carefully cultivated over the past decades,” said the China Semiconductor Industry Association (CSIA), as cited by Reuters.
The trade group also stressed the Biden government should “adjust the course of action” and instead follow the framework of global trade forums, such as the ones set by the World Semiconductor Council and the Government Authority Meeting on Semiconductor. Following the Department of Commerce’s announcement, the White House was forced to quickly lift some of the restrictions on foreign chip makers over fears of a complete supply chain meltdown.
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.