New Export Controls Wreck Havoc on China’s Chip Industry

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The US Commerce Department had, on October 7, unveiled sweeping regulations that limit the sale of semiconductors and chip-making equipment to Chinese customers, striking at the foundation of the country’s efforts to build its own chip industry. 

China’s semiconductor industry association said that the US export restrictions are arbitrary and are creating disruption for the industry. The Chinese semiconductor association has urged the US government to reverse the wrongdoings.

The US Commerce Department had, on October 7, unveiled sweeping regulations that limit the sale of semiconductors and chip-making equipment to Chinese customers, striking at the foundation of the country’s efforts to build its own chip industry. 

The moves are the Biden administration’s most aggressive yet as it tries to stop China from developing technological capabilities it sees as a threat. Depending on how broadly Washington enforces the restrictions, the impact could extend well beyond semiconductors and into industries that rely on high-end computing, from electric vehicles and aerospace to simple gadgets like smartphones.

Following the imposition of curbs by US, ASML had asked its employees in the  US to stop servicing, shipping or providing support to any customers in China.  The Netherlands-based ASML is a maker of advanced equipment for producing semiconductors.

In its statement to CNBC-TV18, ASML said, “We are assessing the potential implications of the new regulations, if any, and cannot comment at this moment.”

The US department of commerce has imposed these export controls to restrict China’s ability to purchase and manufacture high end chips used in military applications. It is also aimed at restricting the country’s ability to make and maintain super computers.

Under the newly imposed export curbs, companies require new licensing for shipping equipment to China for use in supercomputers or making of semi conductors.

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