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Before that, Chinese authorities in May issued a de facto ban on the sale of US chip maker Micron Technology’s products in the country.
Both the moves were seen as retaliation for Washington’s export controls targeting China and a sign of escalation in the hi-tech war between the world’s two largest economies.
The US Commerce Department is reportedly mulling a new rule that could stop the unlicensed shipment of artificial intelligence chips made by Nvidia and AMD to customers in China as a step to expand a semiconductor export control overhaul announced in October.
US President Joe Biden’s administration is also crafting a screening mechanism for outward investment to China, though US Treasury Secretary Janet Yellen said on Monday that the measure would be “narrowly targeted” and focus on “a few sectors” such as semiconductors, quantum computing and AI.
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China imposes restrictions on US chip maker Micron, escalating tech war
China’s toolbox of countermeasures might not be deep enough as it has already sanctioned Micron and restricted the exports of the two technology-critical materials, according to Jun Zhang, an associate professor of economic geography at the University of Toronto.
“Given China’s huge import-export gap in the entire semiconductor value chain, China’s only potential weapon is the big market,” Zhang said.
He said Beijing might stop buying some semiconductor products from the US, but the country’s import reduction, especially at the higher end, may be exactly what the US government wanted.
“The US government only has limited ability to prevent American companies from selling their cutting-edge products to China, especially those with a high dependency on the Chinese market.”
Still, he said that China might take action without saying it out loud.
“It depends on how the [US-China] relationship and sanctions would evolve in the future,” Zhang said.
China is unlikely to win the semiconductor race with the US since it is too far behind in technology, especially in equipment, said a Chinese semiconductor engineer based in the US who spoke on condition of anonymity. He added that he did not expect the gap to change significantly in the next five years.
“Raising tariffs on chips is not feasible, it’s the general public who will pay the bill in the end,” he said.
“An embargo is even more unrealistic, we can’t just stop producing new cell phones for three years. So the countermeasures can only come from other industries.”
Lu Xiang, an expert on US-China relations at the Chinese Academy of Social Sciences (CASS), said China had been very restrained in pursuing reciprocal retaliation and would avoid actions that destabilise the global supply chain, but that did not mean it would let the US do whatever it wanted.
“I firmly believe that if we need to retaliate, we have enough measures to do so,” Lu said.
Still, he added that China did not want to go that far because of the “very large” potential impact on the global industrial chain.
“China will never want to see the global economy suffer more shocks.”
“[Beijing hopes] that bilateral relations will not deteriorate to the point where China will have to take large-scale countermeasures,” Lu said.
