us blocks 140 chinese tech firms in latest semiconductor crackdown
Beijing, Monday, 2 December 2024.
The Biden administration launched its most aggressive strike yet against China’s tech ambitions, targeting 140 Chinese companies with new semiconductor export restrictions. The December 2 announcement specifically blocks access to critical high-bandwidth memory chips and 24 types of chipmaking equipment essential for artificial intelligence development. This third major crackdown in three years comes just days after Huawei showcased its advanced Mate 70 smartphone series, demonstrating China’s growing capability to circumvent previous restrictions. Commerce Secretary Gina Raimondo called these measures the strongest controls ever enacted, aimed at preventing China from advancing its military modernization. The timing is crucial, as these restrictions arrive weeks before President-elect Trump’s inauguration, potentially cementing Biden’s tech policy legacy in the ongoing US-China semiconductor battle.
impact on the semiconductor market
The latest restrictions have sent ripples through the global semiconductor market. Companies like Lam Research, KLA, and Applied Materials, which supply essential chipmaking tools, are facing potential revenue hits due to the export restrictions. Analysts predict a decline in stock value for these firms as they adjust to reduced access to the Chinese market. The immediate market reaction has been cautious, with investors closely monitoring the impacts on quarterly earnings. The strategic importance of high-bandwidth memory chips for AI and military applications underscores the stakes involved in these new regulations.
investor sentiment and stock performance
Investor sentiment remains wary amid concerns about the long-term impacts on U.S. semiconductor toolmakers. The restrictions could lead to a 21 potential reduction in market size for affected companies, assuming a 15% market share in China. However, some experts argue that the restrictions might bolster domestic investments in semiconductor technology, potentially offsetting some losses. Stocks of companies heavily reliant on Chinese sales, like Applied Materials, showed a slight dip in early trading, reflecting investor uncertainty about future earnings.
expert opinions on future outlook
Experts offer mixed opinions on the future outlook for the semiconductor industry. Chris Miller, a noted industry analyst, suggests that the CHIPS Act could drive a resurgence in domestic manufacturing, potentially increasing stock values for U.S.-based companies in the long run. Conversely, Lin Jian from the Chinese foreign ministry argues that these measures disrupt global supply chains, which could lead to broader market volatility. The upcoming policies under President-elect Trump are expected to maintain or even intensify these restrictions, keeping the industry on edge.
strategic implications for china
The restrictions highlight a strategic effort by the U.S. to hinder China’s technological advancements, particularly in sectors critical to national security. China’s ambition for self-sufficiency in semiconductor production faces significant setbacks, as the country continues to lag behind industry leaders like Nvidia and ASML. The ban on U.S. investments in China’s advanced technology sectors, effective January 2025, further complicates China’s path to technological autonomy. These measures are perceived as economic coercion by Chinese officials, raising tensions in the already fraught U.S.-China trade relationship.