Sunday, 04 Dec 2022

What do US curbs on selling microchips to China mean for the global economy?

What do US curbs on selling microchips to China mean for the global economy?


What do US curbs on selling microchips to China mean for the global economy?

The moves are designed to cut off supplies of critical technology to China that may be used across sectors including advanced computing and weapons manufacture.

On 7 October, the Biden administration imposed a sweeping set of export controls that included measures to cut China off from certain semiconductor chips and chip-making equipment.

Under the rules, US companies must cease supplying Chinese chipmakers with equipment that can produce relatively advanced chips unless they first obtain a licence.

The new regulations also add controls on some semiconductor production items and transactions for specific end-uses of some integrated circuits or chips. The US also wants to increase its export controls to include semiconductor products and software, technology, and other things used to develop and make integrated circuits. In a further restriction, US citizens and green-card holders will also be banned from working on certain technology for Chinese companies and entities.

China consumes more than three-quarters of the semiconductors sold globally, but produces only about 15% of global output.

The new restrictions may spur Chinese chipmakers to try producing advanced chips by using creative engineering solutions with older technologies not subject to the sanctions.

The China Semiconductor Industry Association said in a statement that it hoped the US government would reverse its decision and return to international trade negotiation processes.

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