US sanctions entire Chinese semiconductor industry

The United States has dealt a powerful blow to Chinese ambitions for technological catch-up: on October 7, the American Department of Commerce unveiled a new salvo of sanctions against the sector in China.

So far, Washington has targeted individual companies, blacklisted for violating US laws, such as Huawei, or for their involvement in human rights abuses or for their collaboration with the Chinese military-industrial complex. This time, the United States regulates the export of certain American products and software to any Chinese entity, obliging them to obtain a license, with a presumption of refusal.

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At the end of August, the Americans had already banned the export of graphics cards (graphic processing units, or GPUs) from Nvidia and Advanced Micro Devices (AMD) to China, signaling a shift in approach. GPUs are essential for the performance of artificial intelligence, data centers or supercomputers, used for scientific research, but also for improving the performance of fighter planes or hypersonic missiles.

“Sea Turtles”

“China has invested resources in developing supercomputing capabilities and seeks to become a world leader in artificial intelligence by 2030. It uses these capabilities to surveil and track its own citizens and fuel its military modernization.”justified Thea Rozman Kendler, Assistant Secretary of Commerce for Exports.

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Another novelty, the sanctions prohibit any “American person” to participate in the development, production or use of integrated circuits in a Chinese chip factory. The measure concerns American citizens, residents of the United States and holders of a permanent resident card (“green card”).

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This is enough to limit the transfer of knowledge provided so far by many Americans, often of Chinese origin, who have come to settle in China to work in large local companies, or create their own start-ups. Nicknamed the “sea turtles”, these native Chinese have contributed a lot to the development of the Chinese economy and technologies.

The precise impact of these sanctions will depend on the Commerce Department’s leniency in granting licenses, but the effects are already being felt. Most companies in the sector banned US nationals from continuing their activity, sometimes creating difficulties, while American companies like Lam Research, Applied Materials and KLA Corporation, essential in the production chain of chips, immediately ended their services to Chinese companies, reveals the FinancialTimes.

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