China: US Semiconductor Restrictions Will Backfire

The US' recent announcement to tighten export controls on semiconductors, specifically targeting China, has sparked a strong response from Beijing. China's Ministry of Commerce (MOFCOM) has stated that the US' actions will backfire and have significant consequences for the global semiconductor industry. The MOFCOM spokesperson emphasized that the US' measures are a typical act of economic coercion and non-market behavior, which will disrupt global supply chains and have broader geopolitical implications.

The US' new export controls, which were published as part of a 140-page FR notice, are designed to limit China's ability to produce advanced-node semiconductors that can be used in next-generation advanced weapon systems and AI applications. The rules include new controls on 24 types of semiconductor manufacturing equipment and 3 types of software tools for developing or producing semiconductors, as well as new controls on high-bandwidth memory (HBM). The US has also added 140 entities to its Entity List and modified 14 existing entries, spanning tool manufacturers, semiconductor fabs, and investment companies involved in advancing China's military modernization.

China's response to the US' actions is twofold. First, China has announced measures to tighten controls on the export of relevant dual-use items to the US. These measures include prohibiting the export of dual-use items to US military users or for military purposes, as well as strictly controlling the export of gallium, germanium, antimony, and superhard materials, as well as graphite-related dual-use items to the US. Any organization or individual from any country or region that violates the relevant regulations will be held accountable in accordance with the law.

Second, China has hinted at potential retaliation, stating that it will take necessary measures to safeguard its national security and interests and fulfill its non-proliferation and other international obligations. This could include further restrictions on exports to the US or other measures aimed at protecting China's domestic semiconductor industry.

The US' actions are part of a broader trend of increasing tensions between the two countries, with the semiconductor industry being a key battleground. The US has been taking aggressive steps to protect its technological edge, including investing in domestic chip manufacturing, implementing policies to protect intellectual property, and limiting the export of advanced semiconductor technology to China. Meanwhile, China has been investing heavily in its domestic chip industry, aiming to reduce its dependence on foreign technology and increase self-sufficiency in strategic industries, including semiconductors.

The global semiconductor supply chain is expected to be significantly affected by the US-China trade tensions. Disruptions in supply chains, shifts in production, increased competition, and potential retaliation from China could all have significant impacts on the industry. Countries like Taiwan, South Korea, and Europe may stand to gain from increased investment and market share, while the US and China could face increased competition and potential disruptions in their domestic industries.

In conclusion, the US' new export controls on semiconductors have sparked a strong response from China, with Beijing warning of significant consequences for the global semiconductor industry. The US' actions are part of a broader trend of increasing tensions between the two countries, with the semiconductor industry being a key battleground. The global semiconductor supply chain is expected to be significantly affected by the US-China trade tensions, with potential gains and losses for various countries. As the situation continues to evolve, it will be crucial for all parties involved to engage in constructive dialogue and work towards a mutually beneficial resolution.