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Washington's 'move' to hit global chip supply chain

By Fan Feifei, Mo Jingxi and Ma Si | China Daily | Updated: 2023-01-31 07:00
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Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken Feb 25, 2022. [Photo/Agencies]

Experts voice concern over reported attempt to clamp export limits on China

Washington's reported move to clamp chip export limits on China by securing deals with the Netherlands and Japan will undermine the stability and security of the global semiconductor industrial supply chain, and hurt the interests of chip companies from all over the world, officials and experts said.

Their comments came after Bloomberg reported on Saturday that the United States has reached an agreement with the Netherlands and Japan to restrict exports of some advanced chip-making machinery to China.

Foreign Ministry spokeswoman Mao Ning said on Monday that China firmly rejected the US abuse of export controls, by coercing or alluring other countries, to build small cliques to contain China and to defend its own hegemony and selfish interests. Mao said the US politicization and weaponization of economic and trade issues seriously violate market principles and the international trade order.

"Such practices hurt others without benefiting it (the US) and undermines the stability of global industrial supply chains, which has triggered concerns around the world," she said, noting that the US' attempts to block the paths of others will only lead it to a dead end.

China will continue to closely monitor the latest development and will firmly defend its legitimate rights and interests, Mao added.

Bloomberg quoted anonymous sources as saying that the agreement will extend some export controls the US adopted in October to companies based in the Netherlands and Japan, including ASML Holding NV, Nikon Corp and Tokyo Electron Ltd. The governments of the three countries declined to comment.

"Based on what has been said by government officials and our understanding of the timelines of the legislative process and the effective dates of the different provisions, in combination with the current market situation, we do not expect these measures to have a material effect on the expectations that we have published for 2023," Dutch semiconductor equipment maker ASML said in a statement.

The company said it will continue to engage with the authorities to inform them about potential impacts of any proposed rule in order to assess the impact on the global semiconductor supply chain. "What we need right now is stability and reliability in our industry to avoid further disturbances in the global semiconductor industry," ASML said.

Li Xianjun, an associate researcher at the Institute of Industrial Economics, which is part of the Chinese Academy of Social Sciences, said the stricter export controls will jeopardize the global semiconductor industry and impede international technological cooperation, given China's role as the world's largest chip market and its growing presence in semiconductor manufacturing.

Data from the China Semiconductor Industry Association shows that the revenue of China's integrated circuit industry reached 476.35 billion yuan ($70.56 billion) in the first half of 2022, up 16.1 percent on a yearly basis.

The US government's attempts to coerce other countries to restrict exports of advanced machinery that make semiconductors to China will harm thousands of chip companies around the world and increase political pressures and uncertainties, said Zhong Xinlong, a senior consultant at the China Center for Information Industry Development Consultancy.

According to a forecast by World Semiconductor Trade Statistics, the global semiconductor market will decline by 4.1 percent this year to $557 billion — the first annual contraction since 2019.

The move aimed at suppressing China's semiconductor segment will push Chinese enterprises to step up investments to develop their own advanced semiconductor technologies and equipment, such as lithography machinery, in an effort to improve self-sufficiency in chipmaking, said Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association.

Xiang added that the self-sufficiency rate of China's chip industry is estimated to rise from 10 percent in 2020 to 25 percent in 2023.

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