By Smartencyclopedia with agencies
Beijing — China has responded to the Biden administration’s decision to impose new restrictions on advanced chip exports, voicing its dissatisfaction with the move.
The Chinese foreign ministry asserted that these restrictions “violate the principles of the market economy and fair competition.” The measures encompass chipmaking tools as well as advanced chips, including two from market leader Nvidia, and are seen as an effort to close existing loopholes following the initial wave of chip controls imposed in October.
The United States claims that these measures are intended to prevent China from obtaining cutting-edge technologies that could enhance its military capabilities, particularly in the field of artificial intelligence (AI). While the Biden administration has denied any intention to harm China’s economy, the Chinese foreign ministry has labeled the move as “forced de-coupling for political purposes.”
In response to these restrictions, Chinese stock markets featuring chip-related companies have experienced minor declines. The CSI Semiconductor Index dropped by 1.4% on Wednesday, and the STAR Chip Index lost 1.2%. An index tracking China’s AI companies also closed 1.8% lower.
US chip stocks have also suffered declines as the restrictions impact American firms, including Advanced Micro Devices and Intel. Nvidia has disclosed that the new export restrictions will block the sale of two high-end artificial intelligence chips it had developed for the Chinese market, namely the A800 and H800. Additionally, one of its gaming chips will also be affected. Analysts believe that Nvidia will be among the hardest hit, as China accounts for up to 25% of its revenues from data center chip sales. In the wake of the announcement, Nvidia’s shares, which are considered star stocks, fell by as much as 4.7%.
The Semiconductor Industry Association, representing 99% of the US semiconductor industry by revenue, expressed concerns over the new measures, stating that they are “overly broad” and “risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere.”
China had previously retaliated by restricting exports of two materials, gallium and germanium, which are essential to the semiconductor industry. China plays a significant role in the global supply chain for these materials, producing 80% of the world’s gallium and 60% of germanium, according to the Critical Raw Materials Alliance (CRMA) industry body. These materials are classified as “minor metals” and are often by-products of other processes.
Japan and the Netherlands, home to key chip equipment maker ASML, have also imposed export restrictions on chip technology to China. The ongoing tit-for-tat actions between the world’s two largest economies have raised concerns about “resource nationalism,” where governments stockpile critical materials to exert influence over other countries.