Beijing signals a tougher response to chip boycotts from the USA

Escalation in the "chip war" Beijing signals a tougher response to chip boycotts from the USA

2024-12-16 From Henrik Bork | Translated by AI 3 min Reading Time

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The "Chip War" being waged by the USA against China is escalating even before Donald Trump takes office. On December 2, 2024, Washington announced a third round of sanctions aimed at further increasing pressure on Beijing. Beijing responds with clear signals that harsher retaliatory measures will be taken from now on.

The government of the People's Republic of China is no longer reacting quite so calmly to the sanctions from the USA.(Image: Dall-E / AI-generated) — The government of the People's Republic of China is no longer reacting quite so calmly to the sanctions from the USA.
(Image: Dall-E / AI-generated)

Just one day after the further export controls from the USA, Beijing imposed an embargo on the export of gallium, germanium, antimony, and other "super-hard" materials to the USA. These materials are needed for the production of semiconductors and batteries, and China dominates the global supply chains for these substances.

Also, just one day after the latest round of chip boycotts from Washington, four of the five leading Chinese industry associations warned that chips from the USA are "no longer safe" and should be replaced by domestically produced chips or those from other countries of origin.

And on the same day, again less than 24 hours after the latest escalation of the chip war from the U.S. Department of Commerce, another industry association in China published an expanded "white list" for domestic car manufacturers.

Whitelist for Chinese automakers

The "China Automotive Chip Industry Innovation Strategic Alliance" released its new "White List" for ten categories of automotive chips, including those for controlling body, chassis, engine, and functions of intelligent or autonomous driving. "China had been moving quite slowly or cautiously concerning retaliation against steps taken by the United States, but it seems quite clear that the kid gloves are now coming off," Reuters news agency quoted an analyst.

Beijing had largely responded with a wait-and-see approach, offering new negotiations repeatedly since Washington significantly expanded its trade and technology war against China during Donald Trump's first term in office.

Even when the succeeding administration under Joe Biden further expanded sanctions on semiconductors and equipment for their production, primarily lithography machines, and placed more and more Chinese companies on boycott lists, Beijing did little more than deliver isolated "warning shots." These included a limited sales ban on chips from US manufacturer Micron or the threat of investigations at Intel.

Further tightening is to be expected

However, Beijing is now sending clear signals that it will not remain as passive as before during the second term of President Elect Donald Trump, who is already threatening new tariffs towards Beijing even before taking the oath of office. Echoing the justifications for the US boycotts against China from Washington, the Chinese Ministry of Commerce now cites its own export bans on gallium, germanium, and antimony. These could "also be used for military purposes," said a MOFCOM spokesperson in the Chinese capital.

In its third round of boycotts against China in the Chip War at the beginning of this month, the US government placed 136 more Chinese companies on its "Entity List," prohibiting them from purchasing advanced chips, tools, and software for their production. These are primarily business partners of Huawei and the Chinese foundry SMIC. The list of semiconductors banned from export to China has also been extended again in Washington. Recently, certain HBM chips may no longer be delivered to China. HBM or "High Bandwidth Memory" is a strategically important component for fast data transfer between processors, without which, for example, AI computers can hardly operate.

The Ministry of Commerce in Beijing accused the USA of "misusing control measures" after the latest tightening of sanctions, which "endangers the stability of global supply chains." US Secretary of Commerce Gina Raimondo called the new boycotts the "most stringent controls yet," aimed at downgrading the People's Republic of China's ability to produce the "most advanced chips they use in their military modernization." (sb)

The sanctions imposed by the USA against China do not exclusively have beneficial effects in the "chip war." (Image:Dall-E / AI-generated)

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Escalation in the "chip war" Beijing signals a tougher response to chip boycotts from the USA

Whitelist for Chinese automakers

Further tightening is to be expected

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