Experts warn against US curbs on China's access to chip technology

Experts warn against US curbs on China's access to chip technology

In this andated file photo, a technician tests chips at a tech firm in Hefei, Anhui province. Washington planned to announce new restrictions on China's access to US chip technology, which is already struggling with the risks of fragmentation due to the COVID 19 epidemic, experts said on Thursday.

Their comments came after Bloomberg reported on Tuesday that the US Commerce Department is expected to roll out a package of rules this week governing semiconductor technologies can be exported to China, including making earlier guidance for specific companies generally binding.

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Bai Ming, deputy director of international market research at the Chinese Academy of Trade and Economic Cooperation, said the move would be part of a larger push by Washington to cut China off from the rest of the world in chip supply chains, a move that would be unrealistic and have painful results.

Bai said that such an attempt will deal with a big blow not only to US chip companies, but the global semiconductor industry chain, given China's weight as the world's biggest chip market and its growing presence in semiconductor manufacturing.

The new measures are expected to formalize export restrictions on technology that produces advanced semiconductors, prohibit the sale of tools for logic and memory chip production in China, and restrict access to chips used in supercomputing and artificial intelligence, according to anonymous sources.

Pan Helin, co-director of Pan Helin's Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, said the moves would harm global chip companies, which bank on China for revenue growth.

The Chinese mainland imports more than US $300 billion of semiconductors annually, and most major US semiconductor companies pull in at least 25 percent of their sales from the Chinese mainland market, according to an article by Christopher Thomas on the Brookings Institution's website.

Access to this massive market is essential to the success of any globally competitive chip firm today and in the future, the Semiconductor Industry Association, a Washington-based group representing the US semiconductor industry, said in a report.

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According to Jensen Huang, founder and CEO of Nvidia Corp, said at a news conference that cooperation between China and the US is beneficial for the world, after Washington has banned the major US semiconductor company from shipping two high-end AI chips to China.

The global supply chain is a critical part of the global supply chain as China is a great consumer of products that use US technologies, and China is also a great part of the global supply chain, according to Huang.

Experts said Washington has adopted a series of well-calculated approaches to control China's chip industry, including a law passed earlier this year on chip subsidies. The law has motivated the US company Micron to promise a $100 billion investment for a chip factory in upstate New York over the next two decades.

Zhong Xinlong, senior consultant at the Beijing-based China Center for Information Industry Development Consultancy, said such restrictions will motivate Chinese companies to double down on resources to achieve breakthroughs.

In 2015, the US government stopped Intel from supplying its high-end Xeon Phi processors to China's supercomputer builders. Chinese researchers came up with self-developed processors a year later, under the pressure, said Zhong.