Chinese Chip Industry Association Cautions Against U.S. Export Controls, After a Similar Appeal by U.S. Counterpart

Credit: Visual China

By Li Li

BEIJING, July 20 (TiPost) — China Semiconductor Industry Association (CSIA) called for maintaining global semiconductor supply chains in a statement released on Wednesday in response to the unilateral restrictions on chip exports imposed by the Biden administration.

At the end of June, US media outlets said the U.S. Department of Commerce may impose harsher restrictions on Nvidia’s export of high-performance chips to China as early as July this year, and restrict the leasing of cloud computing business to Chinese AI companies. Last October, the U.S. government announced  initial controls on semiconductor exports to China.

CSIA pointed out in the statement that the vibrant semiconductor industry is attributed to “the collaboration among major countries and regions,” adding that the enormous market of Chinese mainland, which accounts for more than 80% on global basis, “supports the development of the global supply of electronic and information products over the years, which makes an important contribution to the well-being of people around the world, including to the least developed countries. ”

CSIA believes that any damage to the current global supply chain, which evolved alongside the process of globalization over the past decades, could cause“inevitable and irreparable harm” to the global economy. It also noted that “not only such damage can lead to the fragmentation of the semiconductor global supply chain, but also could risk the integrity of the global market, and the prosperity of the global economy.”

U.S. chip industry association Semiconductor Industry Association (SIA) stated on Monday that “repeated steps, however, to impose overly broad, ambiguous, and at times unilateral restrictions risk diminishing the U.S. semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China.”

“We call on both governments to ease tensions and seek solutions through dialogue, not further escalation. And we urge the administration to refrain from further restrictions until it engages more extensively with industry and experts to assess the impact of current and potential restrictions to determine whether they are narrow and clearly defined, consistently applied, and fully coordinated with allies,” said SIA in a statement on its website.

In October 2022, the U.S. Department of Commerce restricted the export of high-performance GPU chips, the crucial part for AI training, to China, in an attempt to cripple the latter’s ability to produce, or even purchase, the high-end chips. As a result, Nvidia, the world’s largest GPU manufacturer, had to sell low-spec chips to the Chinese market.

This is not the first time that the SIA has voiced its concerns over the government’s China chip restrictions. SIA President and CEO John Neuffer said in May that U.S. semiconductor companies cannot afford to ignore the largest Chinese market, despite the US government’s so-called “national security” concerns.

In response to the potential additional restrictions of the U.S. government, Chinese Ministry of Commerce spokesman Shu Jueting said on July 6 that the U.S. has continuously abused export controls against China in the semiconductor industry, and split the global semiconductor market. This is a breach of global free trade, a disregard for international economic and trade rules, and a violation of the principle of fair competition.

The statement of SIA came after chip industry executives of the three major US chip giants –Intel, Qualcomm and Nvidia — traveled to Washington next week to lobby against the Biden administration’s expansion of export controls on chips and semiconductor manufacturing equipment to China, hoping that the government may realize that the potential escalated restrictions will undermine the diplomatic efforts of China and the United States, according to Bloomberg.

The Biden administration is also considering restrictions on U.S. investment in China. The restrictions will focus on a few industries, especially semiconductors,

quantum computing and artificial intelligence, the U.S. Treasury Secretary Jay Yellen said on July 17.

On May 31, U.S. Assistant Treasury Secretary for Investment Security Paul Rosen said at a U.S. Congress hearing that a plan was being considered to restrict the flow of U.S. dollar investments to some countries. China was on the list.

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