U.S. High-Tech Export Restriction Measures to China: Key Challenges for the Global Semiconductor Industry

The U.S. is imposing new restrictions on exports of advanced semiconductors and equipment to China, aimed at preserving technological advantage and preventing Chinese military applications. The move is causing major disruptions to the global supply chain, which could have a significant impact on key industries around the world.

U.S. High-Tech Export Restriction Measures to China: Key Challenges for the Global Semiconductor Industry
Photo by: Domagoj Skledar/ arhiva (vlastita)

U.S. export restrictions on high technology to China and effects on the global semiconductor industry


The U.S. administration has continued with aggressive restrictions on exporting advanced technologies to China, aiming to maintain technological superiority and protect national security. New measures, introduced at the beginning of October 2024, further expand previous restrictions set in 2022 and 2023, including complex regulations on the export of advanced semiconductors, computer chips, and manufacturing equipment, especially those intended for military purposes or use in Chinese supercomputing.


Details of the new rules: what changes in export licenses?


Under the latest amendments, U.S. companies must apply for a license before exporting advanced chips and related technological components to China. Especially covered are high-performance components needed for artificial intelligence and quantum computing, and licensing is subject to a "presumption of denial" for all products deemed critical to China's military sector. These restrictions also include additional measures towards companies in third countries that use U.S. technology, aiming to prevent potential circumvention of the export embargo through offshore branches of Chinese companies. For specific components, such as advanced lithography machines needed for semiconductor manufacturing at 16 nm levels and below, a license requirement is now mandatory even if manufactured abroad but with U.S. technological input.


Impact on China's technology industry and plans for technological self-sufficiency


These measures could significantly impede the development of China's tech sector, which relies on advanced chips for further development of artificial intelligence, data analytics, and innovative applications. China has already announced plans to increase domestic semiconductor production, along with plans to develop sophisticated supercomputers. However, such restrictions could slow the pace of progress and make it difficult to achieve goals, especially since China has so far depended on U.S. technology for the most advanced semiconductor components. U.S. authorities further emphasized that these measures are part of a broader export restriction plan, including continued cooperation with partners like Japan and South Korea, which have also taken similar steps towards China.


Effects on the global supply chain and semiconductor prices


Since U.S. companies are the main manufacturers of chip-making equipment, the new rules could cause delivery delays and raise prices globally. Potential shortages and cost increases could disrupt the global semiconductor supply chain. Experts warn that rising costs and delivery delays could impact industries worldwide, including automotive, communication, and computer sectors, which rely on these components. To mitigate short-term effects, U.S. authorities have introduced a temporary license allowing limited export activities but only for components not intended for use in China.


The Chinese government's new approach and international reactions


The Chinese government has sharply criticized these moves, accusing the U.S. of disrupting free trade and imposing unfair trade barriers. Chinese officials have stated that they will further intensify efforts toward technological self-sufficiency, especially through public-private partnerships that could accelerate domestic production of advanced chips and lithography equipment. U.S. trade partners are divided; while allies like Japan and South Korea cooperate with the U.S. in implementing similar controls, other countries avoid a clear stance in this conflict. The U.S. administration is working intensively to strengthen cooperation with international partners in aligning export rules to ensure maximum efficiency of export controls.


Future course of U.S.-China relations


These restrictions are just one step in the strategic struggle between the two powers, and many analysts predict that the U.S. will continue with further restrictions on technological transfers to China. This U.S. approach to China also signals the American administration's readiness to take more aggressive steps in protecting technological superiority and national security, with additional sets of measures expected in the near future. As both sides strengthen their positions, experts suggest that potential escalation could have long-term consequences on the global economy.

Creation time: 31 October, 2024
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