TECHNOLOGY COMPETITIONCompanies Weigh Fallout from U.S. Ban on Sending Chip Tech to China
The new U.S. ban the transfer of advanced U.S. semiconductor technology to China affects not only U.S. firms that sell to China, but any company whose products contain American semiconductor technology. Semiconductor companies and other tech firms that count China among their largest single markets are facing potentially severe damage to their revenues.
The Biden administration’s announcement earlier this month that it would ban the transfer of advanced U.S. semiconductor technology to China continues to reverberate through global markets. The ruling by the Department of Commerce affects not only U.S. firms that sell to China but any company whose products contain American semiconductor technology.
In mainland China, according to Bloomberg News, officials from the Ministry of Industry and Information Technology have been summoning executives from domestic semiconductor manufacturers to assess how being deprived of high-tech manufacturing tools from overseas would impact their businesses. And companies that rely on imports of high-end semiconductors are assessing the viability of their businesses going forward.
In the U.S., semiconductor companies and other tech firms that count China among their largest single markets are facing potentially severe damage to their revenues. Other companies that manufacture tech products in China are having to recall U.S. employees because the ban also bars “U.S. persons” from supporting technology covered by the ban.
Internationally, large chipmakers, such as Taiwan Semiconductor Manufacturing Company and South Korea’s Samsung, as well as Netherlands-based ASML, which makes chip manufacturing equipment, are reassessing their business with China as they explore how deeply the new rules will cut into their sales.
“It really is reshaping the market,” said James Lewis, senior vice president and director of the Strategic Technologies Program at the Center for Strategic and International Studies. “The Koreans, the Taiwanese and some American companies are really nervous about it. I mean, everyone’s asking, ‘What can I still sell to China?’ And in some cases, the answer is ‘nothing,’” he told VOA.
Targeting China’s Military
The Biden administration has characterized the ban as a national security measure, saying that withholding highly sophisticated semiconductors from China will hamper the development of Chinese weapons and surveillance technology.
The trouble is that the same technology that goes into Chinese weapons systems is also necessary for other goods, including electric vehicles, an area in which China is significantly further advanced than the U.S.
It remains unclear precisely how U.S. authorities will enforce the ban. It primarily targets the most advanced chip technology available, meaning that “mature” chip technology — older and less sophisticated chips — will not be affected.
Where the U.S. draws that line, however, could determine whether Chinese businesses such as smartphone manufacturers and commercial aerospace companies are left alone or devastated.
