U.S. Sanctions Force Western Suppliers to Cut Ties with Chinese Chipmakers
In response to U.S. new export controls, some Western suppliers have begun cutting ties with Chinese chipmakers. This is another sign of the partial technology separation the Biden administration has mandated to stop China’s military advancement.
ASML, a large chip-making equipment supplier, advised U.S. workers to cease servicing or installing equipment in any Chinese chip factory while it complies with the new rules. Applied Materials, another equipment supplier, stated that it will not be able to make sales in excess of $400 million during the fourth quarter due to export restrictions.
Lawyers say it is not uncommon for Western companies to suspend exports immediately after new U.S. restrictions. They then resume them later, once they have deciphered the rules. National-security experts claim that the new U.S. restrictions are the most severe. They aim to prevent China from producing advanced chip technology.
“I consider these export controls to be extremely important. Martijn Rasser is a senior fellow at The Center for a New American Security. A new rule that prohibits “U.S.” from supporting certain Chinese chipmakers is particularly noteworthy. Rasser stated that a new rule prohibiting “U.S. persons” from supporting certain Chinese chipmakers “won’t just freeze China’s capabilities in place, but it will actually cause a degradation over the course of time.”
Willy Shih, a Harvard Business School professor specializing in manufacturing and technology, warned that the trade restrictions could have unintended effects for the United States. He said that China could be deprived of the ability to produce high-tech chips. This would cause China to produce lower-quality chips and make it more difficult for Western and American factories to compete in this market. This could make Western buyers dependent on Chinese suppliers for such chips.
He said that export controls were “a bit of a blunt tool.” Collateral damage is what you need to be concerned about.
Commerce Department overseeing the regulations said that it was monitoring for potential negative consequences. “That’s something we continue watching and if we see unintended consequences, we’ll adjust accordingly,” a Commerce official said to The Post Monday. He spoke on condition of anonymity as the person was not authorized to speak publicly.