China Business Groups Campaign Against Using US Chips

He says that China has significantly boosted its investments in local chipmakers and related suppliers since 2018, laying a foundation for the country to gradually eliminate US suppliers from its supply chain.

He says that the growth of China's chip exports was higher than that of chip imports, showing that China will not have to import foreign chips one day. He says once China can dominate the legacy chip market, the US will lose its leading status in the global chip market.

In the first 10 months of this year, China's chip exports surged 19.6% year-on-year to 246 billion units while chip imports increased 15% to 456 billion units, according to China's General Administration of Customs.

Wang Feiyun, a Beijing-based columnist, writes that as the US forbids Chinese firms from buying its high-end chips, it's fair that Chinese companies reduce their purchases of American legacy chips.

“We do not only stop buying US chips, but also stop the US from obtaining China's raw materials,” Wang says, referring to the Chinese Ministry of Commerce's latest decision to ban the export of some of China's critical metals used in semiconductor production to the US.

The Commerce Ministry said on December 3 that the exports of gallium, germanium, antimony and“superhard materials” such as diamond and cubic boron nitride to the US are now completely banned. It also said the exports of graphite elements to the US will be subject to stricter end-user checks.

“The latest round of China's retaliations is stronger than the previous ones as China openly said it is targeting the US,” Wang says.“Besides, American firms' imports of Chinese critical metals for civil use are also banned.”

He says it's a smart move that Chinese industry groups, instead of the Chinese government, called for reducing the purchases of US chips. He says the US won't be able to find a reason to file a World Trade Organization complaint.

“It is true that China has shortcomings in producing high-end chips. But actually, 14-nanometer chips are good enough for making 90% of electronic products,” he says.“And China has already realized the mass production of 28nm chips with a 95% yield.”

He says the US measures against China will only fuel a chip war that will make US chip makers, such as Intel and Qualcomm, lose access to the Chinese market.

On December 2, the US Commerce Department's Bureau of Industry and Security (BIS) unveiled the third package of chip export rules against China, following two previous rounds in October 2021 and 2022.

The BIS added 140 Chinese chip makers and suppliers to its“Entity List” and imposed new export controls on 24 types of semiconductor manufacturing equipment, three types of software tools for developing or producing semiconductors and high-bandwidth memory (HBM) chips.

“This action is the culmination of the Biden-Harris administration's targeted approach, in concert with our allies and partners, to impair the People's Republic of China's ability to indigenize the production of advanced technologies that pose a risk to our national security,” said US Secretary of Commerce Gina Raimondo.

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She said the further strengthening of US export controls underscores the Department of Commerce's central role in executing the United States' broader national security strategy.

Western media have reported on all these new controls over the past few months, but the announcement was postponed to this month because the US had to discuss them with its allies, including Japan, South Korea, Taiwan and the Netherlands .

“China has lodged serious protests with the US for once again updating the export controls on semiconductors and sanctioning Chinese companies, and maliciously suppressing China's technology progress,” Lin Jian, a spokesperson of the Chinese Foreign Ministry, said on December 3.

An article published by King & Wood Mallesons, a Beijing-based law firm, said the coverage of the latest US chip ban is very broad as many chip makers' subsidiaries, dozens of state-owned Chinese chip makers and two investment firms were sanctioned.

It said the chip ban showed that the Biden administration has deep knowledge about key players in China's chip sector and that the operations of some Chinese chip makers will be disrupted in the short run.

Read: China sharpens trade war tools ahead of Trump's arrival

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