China has issued a stern warning of potential retaliatory measures in response to the United States’ recent tightening of export controls on semiconductor technology. The U.S. Department of Commerce has expanded restrictions to include 24 types of chip manufacturing equipment, three software programs, and high-bandwidth memory (HBM) chips essential for advanced artificial intelligence applications. Additionally, approximately 140 Chinese entities have been added to a trade blacklist, necessitating special licenses for U.S. suppliers to engage with them.
He Yadong, spokesperson for China’s Ministry of Commerce, condemned the U.S. actions, stating that they “severely disrupt international economic and trade order, destabilize global industry security, and harm cooperative efforts between China and the U.S.” He emphasized China’s strong opposition to what he termed the U.S.’s broadening concept of national security and the “abuse” of control measures targeting Chinese companies. While specific countermeasures were not detailed, He affirmed that China would take necessary actions to safeguard the rights of its enterprises.
The U.S. justifies these controls by expressing concerns that China could leverage advanced semiconductor technology to enhance its military capabilities. The restrictions aim to curtail China’s ability to produce high-end chips independently, which are vital for artificial intelligence and defense applications. However, analysts note that these measures may have unintended consequences, potentially prompting China to accelerate its efforts toward self-sufficiency in semiconductor production.
In a related development, President-elect Donald Trump has proposed imposing up to 60% tariffs on goods from China and a minimum 10% tax on all other imports. He argues that such tariffs would incentivize companies to establish manufacturing operations within the United States, thereby reducing reliance on foreign production. Trump has been critical of the CHIPS and Science Act, a bipartisan bill signed in 2022 that allocated $53 billion to bolster U.S. semiconductor manufacturing. He contends that the act provides excessive subsidies to wealthy corporations and advocates for tariffs as a more effective strategy to encourage domestic production.
The CHIPS Act has led to nearly 200 large-scale manufacturing projects, with investments totaling around $400 billion and the potential creation of approximately 135,000 jobs. Despite these advancements, the incoming administration’s proposed policies introduce uncertainty regarding the future of these initiatives. The semiconductor industry is closely monitoring these developments, as increased tariffs could disrupt existing supply chains and lead to higher costs for consumers.
The escalating tensions between the U.S. and China over semiconductor technology underscore the complex interplay between national security concerns and global economic interests. As both nations navigate this contentious landscape, the outcomes will have significant implications for the global technology sector and international trade relations.
