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China Slams US Expanded Semiconductor Exports Ban, Vows Retaliation

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China Slams US Expanded Semiconductor Exports Ban, Vows Retaliation

Source: YouTube

The U.S. Department of Commerce has intensified its controls on semiconductor exports by adding 140 Chinese firms to its “entity list.” These companies, many of which produce chipmaking tools, software, and high-bandwidth memory chips, now face significant restrictions in accessing American technology. The move, intended to curb China's military advancements and artificial intelligence capabilities, has drawn sharp criticism from Beijing.

U.S. officials, including Commerce Secretary Gina Raimondo, emphasize that these measures aim to limit China’s ability to indigenize advanced technologies that could threaten national security. “We are directly impeding the PRC’s military modernization and weapons programs,” Raimondo stated. Meanwhile, Chinese authorities condemned the expanded ban on semiconductor exports as an abuse of controls and an act of economic coercion.

The Expanded Semiconductor Exports Ban: Impact on China’s Technology Industry

China’s semiconductor sector has already faced hurdles due to prior U.S. export restrictions. The addition of these 140 firms exacerbates the challenges for Chinese tech manufacturers, who rely heavily on U.S. technologies for high-performance chip production. Companies like Naura Technology Group and ACM Research have seen their stock values drop following their inclusion in the ban.

In response, Beijing has pledged to protect its national interests. Recent actions, such as export restrictions on materials like gallium and germanium, highlight China’s ability to retaliate. These materials are critical for semiconductor manufacturing, and their restricted supply could affect global chip production. Analysts warn that China's countermeasures could include increased scrutiny of U.S. firms operating within its borders, delays in customs processing, and potential bans on critical American products.

Broader Implications: Global Chip Supply and Economic Repercussions

The fallout from the expanded control of semiconductor exports extends beyond China. While the restrictions aim to isolate Beijing, they also create ripple effects in the global semiconductor exports supply chain. Major Asian players like Taiwan Semiconductor Manufacturing Company (TSMC) and Japan’s Tokyo Electron have seen stock gains as they benefit from diverted demand. However, the restrictions on high-bandwidth memory chips may affect South Korean giants SK Hynix and Samsung, even as they attempt to shift focus to other markets.

The restrictions also pose challenges for American chipmakers. U.S. companies like Intel, which derive substantial revenue from China, may face retaliatory actions. A similar scenario unfolded in 2023 when China restricted government purchases of Micron products following a security review.

Impact on the Incoming Trump Administration

The timing of these semiconductor exports restrictions is significant as President-elect Donald Trump prepares to assume office. Trump has already announced plans to raise tariffs on Chinese goods, signaling a more aggressive trade stance. The expanded semiconductor export ban aligns with this approach, potentially serving as a precursor to broader economic measures.

However, the move also complicates U.S.-China relations further, creating challenges for American businesses reliant on Chinese markets. Trump’s administration will need to navigate the fine line between applying pressure on Beijing and protecting U.S. companies from retaliatory measures.

This escalating tech rivalry has already intensified global competition in semiconductor development. China has increased investments in its domestic chip industry, including a $47.5 billion semiconductor state fund announced earlier this year. While these efforts may reduce China's reliance on foreign technology in the long term, they face significant hurdles in catching up to global leaders like the U.S., Taiwan, and South Korea.

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