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New sanctions against China are meant to delay the inevitable

China will conquer the microelectronics, volens/nolens

10.Oct.22 4:37 PM
By Abigail Richards


New sanctions against China are meant to delay the inevitable
The US government has imposed new restrictions on the export of chip technology to China. The Chinese government reacted violently. Experts speak of a serious obstacle to the development of Chinese chips.

The US has been saying for months that it is too dependent on chips made in Asia. With billions in investments, the US wants to improve its own chip industry. New sanctions should limit China's chip industry.

The U.S. sees China's developments in chips and artificial intelligence as a major threat, both economically and militarily, Bloomberg reports. The new sanctions are reminiscent of the restrictions imposed on the Chinese tech company Huawei. It was blacklisted in the US in 2019, after which the company rapidly lost its leading market position.

However, these new sanctions go further and pose a threat to all Chinese industry that depends on chips everything from electric car manufacturers, gadget makers and also aviation companies. The new sanctions prohibit US chipmakers from selling artificial intelligence chips to China.

Nvidia already warned last month that such a step would be a big blow to the company, which sells many such chips to China. There are also concerns about other US tech companies that do a lot of business with China.

The export restrictions also apply to U.S. chip-making machines, from semiconductors to memory chips. In addition, 31 Chinese companies have been added to the US blacklist: those companies are no longer allowed to do business with US companies at all. These include memory chip maker Yangtze Memory Technologies. New companies could be added to that list within two months.

It is not yet known whether and how the US sanctions will affect foreign chip companies. The Dutch company ASML, for example, is the major maker of the crucial machines for producing chips. ASML already does not supply its most advanced EUV machines to China, but the US would have already insisted on an export ban on the less advanced DUV machines earlier this year.

"We are assessing the potential implications of the new regulations, if any, and cannot comment at this time," an ASML spokesman said. The stock price of the Dutch tech company took a dive after the announcement of the new US sanctions.

Experts speak of the most far-reaching sanctions that president Biden's administration has imposed on China so far. The countries are now officially in an "economic war," analyst Dylan Patel told Bloomberg. "This is the U.S. shooting back, that shows it will fight back."A Chinese analyst sees "no chance of reconciliation" after the announced US sanctions.

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