US sanctions against semiconductor manufacturers: the mood of crisis in China

China has no short-term response to US semiconductor manufacturing restrictions. It seems to be boiling in the background.

(Image: HomeArt/Shutterstock.com)

The Chinese government seems paralyzed by the new US sanctions against the local semiconductor industry. There is no official reaction and it seems that there is no answer. In the background, the Ministry for Industry and Information Technology (MIIT) is apparently convening a series of meetings with chip manufacturers, which are said to have left many questions unanswered so far.

This is reported by the Bloomberg news agency, citing sources close to the government and manufacturers. According to this, YMTC, the largest Chinese memory manufacturer, and the supercomputer specialist Dawning Information Industry Co. see their future at risk.

The new US government sanctions cut China’s entire semiconductor industry from advanced manufacturing technology, severely hampering China’s efforts to build an independent industry. International industry heavyweights such as the Taiwanese contract chip manufacturer TSMC and the Dutch equipment supplier ASML are also adhering to the export restrictions. According to Bloomberg information, MIIT currently represents the position that Chinese manufacturers with the current production possibilities and Chinese customers should at least not go bankrupt.

President Xi Jinping just broached the subject at the 20th National Congress of the Chinese Communist Party, without being anywhere near specific: “We must give high priority to the development of education, enhance China’s autonomy and strength in science and technology, and rely on talent, to advance and promote development. We will accelerate work to build a strong education system, greater scientific and technological strength, and high-quality workforce,” he said.

Market observer Fathom China ranks China’s sluggish response: “When Beijing is caught on the wrong foot, its initial reaction is always slow. Ministers are not empowered to make decisions on their own, they need the big bosses to decide. And the At the moment the big bosses are busy with the congress.”

Coming reactions, meanwhile, could affect neighboring Taiwan, where chip job shops TSMC and UMC operate most of their semiconductor plants. In the long term, China wants to integrate Taiwan into its own nation – if necessary by force.

In a panel discussion at Harvard University, US Secretary of State Antony Blinken explained that China’s policy towards Taiwan has become more aggressive in recent years and that the US expects the so-called Taiwan question to accelerate. In the event of an attack, the US has repeatedly promised military support to Taiwan.

“What has changed is the fact that Beijing has taken a different stance towards Taiwan in recent years. Instead of maintaining the status quo, which has been established in a positive way, the fundamental decision has been made that the status quo is no longer acceptable and that Beijing is committed to pursuing reunification in a much faster timeframe,” said Blinken. “And if peaceful means didn’t work, then it would use coercive means — and possibly, if coercive means didn’t work, perhaps violent means — to achieve its ends. And that’s what deeply disrupts the status quo and creates enormous tensions.”

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