Trade war with the USA

China’s chip industry is relaxed about new sanctions

A factory building of the Chinese chip manufacturer SMIC

(Bild: SMIC)

Several Chinese chip companies newly placed on a sanctions list by the USA expect little impact on their business. Empyrean, a company specializing in software for semiconductor development, announced its intention to cut itself off from foreign suppliers more quickly.

Jiangsu Nata Opto-Electronic Materials, a supplier of basic materials for chip production, referred to well-stocked material warehouses. They will find local substitutes for foreign suppliers.

Analysts disagree on the economic consequences of the tightened US restrictions on technology exports to the People's Republic. The current measures are aimed at China's Achilles heel, warned Martijn Rasser, Managing Director of Datenna, an industry service specializing in the Chinese technology sector. Semiconductor manufacturers there are heavily dependent on machines from foreign suppliers such as ASML from the Netherlands, Applied Materials from the USA and Nikon from Japan.

Declining investments
Due to the US embargo, experts at investment bank Jefferies expect investments by Chinese chip companies to fall by 30 percent to 35 billion dollars (33.3 billion euros) in the coming year. As some exemptions apply to suppliers from the Netherlands and Japan, ASML confirmed its targets for 2024 despite the new sanctions.

Other experts pointed out that many Chinese companies had brought forward orders in anticipation of new sanctions. According to the local customs authority, imports of machines for chip production rose by a third to 24.12 billion dollars in the first nine months of 2024. According to analyst Jeff Koch from research firm SemiAnalysis, the additional measures did not affect the business of Chinese companies any more than the previous ones.

Boycott of foreign chips could hit AMD, Intel and Nvidia
In order to slow down China's technological and military rise, the USA has increasingly restricted the export of certain goods to the People's Republic in recent years. The government in Beijing has repeatedly criticized this approach as "coercion" and "abuse of power". A few hours after the most recent tightening of the US embargo, it banned the delivery of metals such as gallium and germanium, which are important for chip production, to the USA.

At the same time, several Chinese industry associations called for only locally manufactured computer chips to be purchased in future, as US products are "no longer safe". This could affect AMD, Intel and Nvidia, for whom China has been an important sales market to date. The US company Micron suffered a low double-digit percentage drop in sales due to a ban on supplying its memory chips to key Chinese industries.