trump tightens grip: new chip restrictions threaten china's tech ambitions

2025-02-25 general

Washington, Tuesday, 25 February 2025.
the trump administration is reportedly considering even stricter semiconductor export controls to china, escalating trade tensions and potentially impacting major players like asml, nvidia, and tsmc. these companies rely heavily on sales to chinese firms. the move aims to impede china’s domestic semiconductor industry, potentially disrupting global supply chains. it could also reduce revenue for key semiconductor companies. the u.s. is also pressuring allies to implement similar measures, holding meetings with japanese and dutch counterparts to limit their support of china’s chip sector. the hang seng tech index, initially down over 4%, recovered partially following the news.

market reaction and investor concerns

News of potential restrictions has already spooked investors, leading to a fall in the stocks of Intel, AMD, and ASML [1]. The Trump administration’s actions mirror earlier efforts under the Biden administration to limit Beijing’s technological capabilities [3]. These actions involve discussions about potential sanctions on specific chinese companies and further limitations on exporting Nvidia Corp. chips to China without a license [2]. The overarching goal is to prevent China from developing a domestic semiconductor industry that could boost its artificial intelligence (AI) and military capabilities [5].

impact on semiconductor companies

The restrictions may affect companies like Tokyo Electron Ltd. and ASML Holding NV, as the U.S. government is in talks with Japan and the Netherlands to limit their activities in China [2][3]. Concerns exist regarding the maintenance of semiconductor gear in China by engineers from these companies [3][4]. Ma Jihua, a telecom industry observer, suggests that pressuring allies to tighten restrictions could harm their own economic interests, as losing access to the Chinese market would be detrimental [6]. If these companies halt maintenance services, they may be compelled to cut sales in China, damaging their global reputation [6].

china’s response and global implications

China’s Foreign Ministry has condemned the U.S.’s actions, stating that they politicize and weaponize trade and technology issues, impeding the global semiconductor industry’s development and ultimately backfiring [6]. The ministry has also expressed firm opposition to new U.S. artificial intelligence export control measures, vowing to safeguard China’s legitimate rights and interests [6]. Trump’s approach contrasts with the previous administration’s agreement with the Netherlands, which was deferred after Trump’s election win [5][6]. The current administration is also considering refining the AI diffusion rule, potentially reducing the computing power exportable without a license [2][5].

taiwan’s precarious position

Trump’s chip tariff threats raise stakes for Taiwan, which produces over half of the world’s chips and views its semiconductor industry as a “silicon shield” against potential threats [7]. TSMC, the world’s largest chipmaker, has invested over $65 billion in factories in the United States, Japan, and Europe [7]. Concerns are rising that Taiwan could lose its “silicon” protection if it builds too many factories overseas [7]. A fraction of Taiwan’s $165 billion chip exports last year went directly to the U.S. [7]. Tariffs may lead to higher prices for smartphones and laptops, impacting chip demand and possibly triggering a recession in the semiconductor industry [7].

Bronnen

Export Controls Trade Restrictions