How Companies Are Dealing with US Restrictions on Chip Exports to China
The U.S. Commerce Department announced a series of new trade restrictions earlier this month that banned the export of some computer processing chips to China.
The restrictions affect not only U.S. businesses selling to China, but also any company whose products contain American chip technology. The U.S. government action has many companies considering how to move forward under the new rules.
Bloomberg News recently reported China’s government had held emergency talks with Chinese chip manufacturers to discuss how the restrictions would affect their businesses.
Companies that depend on imports of high-quality chips have been considering possible harm the U.S. policy could cause.
Numerous American technology companies doing major business with China are facing possible severe damage to their profits. Other companies that manufacture technology products in China are having to withdraw U.S. employees because the ban also bars "U.S. persons" from supporting technology covered by the ban.
Internationally, large chipmakers are reconsidering their business with China as they explore how deeply the new rules will cut into their sales.
James Lewis is a senior vice president and director of the Strategic Technologies Program at the Center for Strategic and International Studies in Washington D.C. He told VOA the new restrictions seem to be "reshaping the market."
"The Koreans, the Taiwanese and some American companies are really nervous about it,” Lewis said. “I mean, everyone's asking, 'What can I still sell to China?' And in some cases, the answer is 'nothing,'" he added.
The administration of U.S. President Joe Biden has described the import ban as a national security measure. It says cutting off advanced chips from China will help limit the development of Chinese weapons and spying tools. U.S. officials have said such technology could help China create weapons of mass destruction and tools to abuse human rights and strengthen its military.
But experts note that the same technology that goes into Chinese weapons systems is also necessary for other products, such as electric vehicles.
It remains unclear exactly how the U.S. will enforce the ban. The policy mainly targets the most advanced chip technology available. This means that older and less-developed chip technologies are not affected.
Technology experts have suggested the ban represents a clear strengthening of U.S. efforts to keep China from being able to advance toward technological equality with the United States.
In Britain’s Financial Times newspaper, U.S. national editor and columnist Edward Luce wrote that "Joe Biden this month launched a full-blown economic war on China."
China reacts
Speaking at the Chinese Communist Party's five-year congress on Sunday, President Xi Jinping did not speak directly about the ban. But he did promise to increase investment in areas that would help his country reach "technology self-reliance."
"China will move faster to launch a number of major national projects that are of strategic, big-picture and long-term importance," Xi said.
In a statement, a spokesperson for the Chinese embassy in Washington said he sees the ban as a U.S. move to use its own technological strengths to limit technology growth in less developed markets.
"The U.S. probably hopes that China and the rest of the developing world will forever stay at the lower end of the industrial chain,” Liu Pengyu said. The U.S. action, he warned, will harm the world supply chain, with the final result “hurting (the U.S.) and others.”
So far, chip companies have reacted carefully to the ban. While recognizing the government's concerns, they have noted they were not given a chance to discuss the policy with U.S. officials before it was announced. Some businesses have also said they have not been informed about how the ban will be enforced.
Words in This Story
chip – n. a small piece of semiconducting material used to make parts that help power computer processors
advanced – adj. having developed or progressed to a late stage
full-blown – adj. completely developed
self-reliance – n. the quality of not needing help or support from other people
strategic – adj. helping to achieve a set plan
supply chain – n. the system of people and things that gets a product from its place of manufacture to the person who buys it
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