As the global semiconductor industry faces uncertain times, China is bolstering its strategies to counter potential U.S. trade restrictions that could resurface under the administration of a new American president. With previous restrictions during Donald Trump’s first term and recent limitations from Joe Biden’s administration, China’s semiconductor sector has learned to adapt and build resilience through a multifaceted approach that includes diversifying suppliers, strengthening partnerships, and enhancing domestic capabilities.
Renewed Focus on Domestic Capabilities and Resilience
In recent years, China’s semiconductor industry has been doubling down on self-reliance amid trade tensions with the U.S. From investing in home-grown technology to securing foreign suppliers of crucial equipment, Chinese semiconductor companies are taking steps to mitigate risks. The country is actively increasing its purchases of chipmaking equipment from overseas, with imports rising by over 30% in the first nine months of this year to reach $24.12 billion, according to China Customs data.
Key items in these imports include lithography machines—a crucial component in the production of advanced semiconductors. These imports are largely sourced from the Netherlands, home to ASML Holding, a global leader in the manufacture of photolithography machines. Although ASML’s most advanced machines, including extreme ultraviolet (EUV) models, have been barred from sale to China since 2019, Chinese firms have increased their procurement of older deep ultraviolet (DUV) machines. Despite Biden’s export controls, Chinese companies have strategically placed orders to stockpile these essential technologies in anticipation of potential policy changes from the next U.S. administration.
Rising Demand for Overseas Talent and Partnerships
Beyond equipment, China’s semiconductor firms are looking to bolster their talent pool and form new partnerships, particularly in countries affected by U.S. policies. Zhu Jing, Deputy Secretary-General of the Beijing Semiconductor Industry Association, recently encouraged Chinese companies to explore overseas business opportunities and strengthen ties with countries that might also be impacted by U.S. restrictions.
In particular, Chinese companies may look to recruit foreign talent, especially if future U.S. policies make it harder for Chinese nationals to work or study in the United States. By attracting skilled professionals and fostering partnerships with foreign companies, China hopes to accelerate its path toward a self-sustaining semiconductor industry.
"After a new U.S. administration takes office, there may be opportunities for the development of China’s semiconductor industry through an influx of international talent and partnerships with multinational companies," Zhu said in a recent statement on WeChat.
The Shadow of Trade Restrictions and the Push for Self-Sufficiency
China’s semiconductor industry has experienced firsthand the impact of U.S. restrictions. During Trump’s previous term, prominent Chinese tech companies like Huawei, ZTE, and SMIC were blacklisted, restricting their access to critical U.S. hardware and software. Although the Biden administration has shifted towards broader export controls affecting all of China’s access to advanced semiconductors, the lessons from Trump’s trade policies remain fresh for Chinese tech giants.
This awareness has intensified the industry’s focus on self-sufficiency. Articles from Chinese firms and research analysts have emphasized the importance of building domestic capabilities to withstand potential new rounds of restrictions. Jinan Lujing Semiconductor Co., a Chinese maker of security chips, recently highlighted the need for localization to fortify the industry against future U.S. trade policies.
“The first Trump term taught us the significance of localizing semiconductor production. We’ve since focused on paving the way for a self-reliant semiconductor industry in China,” the company shared in a recent statement.
Enhanced Preparedness to Weather Future Trade Challenges
Compared to 2018, China’s tech sector appears better equipped to handle trade uncertainties. After facing tariffs and restrictions from Trump’s first term, Chinese companies have built up their production capacities and sought alternative suppliers to minimize dependence on American technology. This approach includes diversifying sources for chipmaking machinery and investing in emerging domestic semiconductor technologies.
Nori Chiou, an investment director at Singapore-based White Oak Capital Partners, commented on China’s enhanced resilience: “Chinese tech companies have learned from past trade conflicts. Today, they feel more prepared for any future tensions, equipped with increased production capacity and supply chain flexibility.”
Global Ramifications for the Semiconductor Supply Chain
The semiconductor industry’s challenges extend beyond China and the U.S. Taiwan, South Korea, and Japan are also closely monitoring U.S. trade policies, given their central role in the global chip supply chain. Major semiconductor producers like Taiwan’s TSMC and South Korea’s Samsung could be indirectly affected by U.S. restrictions on China, impacting production timelines, supply chains, and partnerships across Asia and beyond.
ASML, the Netherlands-based lithography giant, has also faced the complex task of balancing demand from Chinese companies with U.S. export restrictions. Despite ramping up sales of older equipment models to Chinese buyers, ASML has been unable to fulfill demand for its most advanced EUV machines, which are critical for producing next-generation chips. In response, the company is carefully navigating regulatory constraints while maintaining its position as a top global supplier.
The Path Forward: Collaboration and Innovation
China’s strategy to insulate its semiconductor sector from U.S. trade restrictions involves collaboration with countries beyond its traditional partners. Some analysts believe China may explore alliances with nations that could benefit from diversifying away from U.S.-dominated tech standards. By fostering innovation through such partnerships, China aims to develop alternatives to American technology that could benefit the wider semiconductor ecosystem.
However, analysts caution that building a fully independent semiconductor industry will take years of investment and research. The sector is highly complex and reliant on cutting-edge technology that remains concentrated in a few countries. Nonetheless, China’s long-term vision of achieving self-reliance continues to shape its approach to semiconductor production and trade.
Looking Ahead
With a new U.S. administration set to take office, the semiconductor industry is bracing for the possibility of renewed trade barriers. Yet, China’s efforts to expand its capabilities and reduce dependency on foreign technology signal its determination to withstand external pressures.
Ultimately, the evolving landscape of U.S.-China relations will have far-reaching implications for the global semiconductor market. As China enhances its resilience and strengthens international partnerships, the industry is likely to see shifts in the competitive dynamics that define this critical sector.
(Soure:www.reuters.com)
Renewed Focus on Domestic Capabilities and Resilience
In recent years, China’s semiconductor industry has been doubling down on self-reliance amid trade tensions with the U.S. From investing in home-grown technology to securing foreign suppliers of crucial equipment, Chinese semiconductor companies are taking steps to mitigate risks. The country is actively increasing its purchases of chipmaking equipment from overseas, with imports rising by over 30% in the first nine months of this year to reach $24.12 billion, according to China Customs data.
Key items in these imports include lithography machines—a crucial component in the production of advanced semiconductors. These imports are largely sourced from the Netherlands, home to ASML Holding, a global leader in the manufacture of photolithography machines. Although ASML’s most advanced machines, including extreme ultraviolet (EUV) models, have been barred from sale to China since 2019, Chinese firms have increased their procurement of older deep ultraviolet (DUV) machines. Despite Biden’s export controls, Chinese companies have strategically placed orders to stockpile these essential technologies in anticipation of potential policy changes from the next U.S. administration.
Rising Demand for Overseas Talent and Partnerships
Beyond equipment, China’s semiconductor firms are looking to bolster their talent pool and form new partnerships, particularly in countries affected by U.S. policies. Zhu Jing, Deputy Secretary-General of the Beijing Semiconductor Industry Association, recently encouraged Chinese companies to explore overseas business opportunities and strengthen ties with countries that might also be impacted by U.S. restrictions.
In particular, Chinese companies may look to recruit foreign talent, especially if future U.S. policies make it harder for Chinese nationals to work or study in the United States. By attracting skilled professionals and fostering partnerships with foreign companies, China hopes to accelerate its path toward a self-sustaining semiconductor industry.
"After a new U.S. administration takes office, there may be opportunities for the development of China’s semiconductor industry through an influx of international talent and partnerships with multinational companies," Zhu said in a recent statement on WeChat.
The Shadow of Trade Restrictions and the Push for Self-Sufficiency
China’s semiconductor industry has experienced firsthand the impact of U.S. restrictions. During Trump’s previous term, prominent Chinese tech companies like Huawei, ZTE, and SMIC were blacklisted, restricting their access to critical U.S. hardware and software. Although the Biden administration has shifted towards broader export controls affecting all of China’s access to advanced semiconductors, the lessons from Trump’s trade policies remain fresh for Chinese tech giants.
This awareness has intensified the industry’s focus on self-sufficiency. Articles from Chinese firms and research analysts have emphasized the importance of building domestic capabilities to withstand potential new rounds of restrictions. Jinan Lujing Semiconductor Co., a Chinese maker of security chips, recently highlighted the need for localization to fortify the industry against future U.S. trade policies.
“The first Trump term taught us the significance of localizing semiconductor production. We’ve since focused on paving the way for a self-reliant semiconductor industry in China,” the company shared in a recent statement.
Enhanced Preparedness to Weather Future Trade Challenges
Compared to 2018, China’s tech sector appears better equipped to handle trade uncertainties. After facing tariffs and restrictions from Trump’s first term, Chinese companies have built up their production capacities and sought alternative suppliers to minimize dependence on American technology. This approach includes diversifying sources for chipmaking machinery and investing in emerging domestic semiconductor technologies.
Nori Chiou, an investment director at Singapore-based White Oak Capital Partners, commented on China’s enhanced resilience: “Chinese tech companies have learned from past trade conflicts. Today, they feel more prepared for any future tensions, equipped with increased production capacity and supply chain flexibility.”
Global Ramifications for the Semiconductor Supply Chain
The semiconductor industry’s challenges extend beyond China and the U.S. Taiwan, South Korea, and Japan are also closely monitoring U.S. trade policies, given their central role in the global chip supply chain. Major semiconductor producers like Taiwan’s TSMC and South Korea’s Samsung could be indirectly affected by U.S. restrictions on China, impacting production timelines, supply chains, and partnerships across Asia and beyond.
ASML, the Netherlands-based lithography giant, has also faced the complex task of balancing demand from Chinese companies with U.S. export restrictions. Despite ramping up sales of older equipment models to Chinese buyers, ASML has been unable to fulfill demand for its most advanced EUV machines, which are critical for producing next-generation chips. In response, the company is carefully navigating regulatory constraints while maintaining its position as a top global supplier.
The Path Forward: Collaboration and Innovation
China’s strategy to insulate its semiconductor sector from U.S. trade restrictions involves collaboration with countries beyond its traditional partners. Some analysts believe China may explore alliances with nations that could benefit from diversifying away from U.S.-dominated tech standards. By fostering innovation through such partnerships, China aims to develop alternatives to American technology that could benefit the wider semiconductor ecosystem.
However, analysts caution that building a fully independent semiconductor industry will take years of investment and research. The sector is highly complex and reliant on cutting-edge technology that remains concentrated in a few countries. Nonetheless, China’s long-term vision of achieving self-reliance continues to shape its approach to semiconductor production and trade.
Looking Ahead
With a new U.S. administration set to take office, the semiconductor industry is bracing for the possibility of renewed trade barriers. Yet, China’s efforts to expand its capabilities and reduce dependency on foreign technology signal its determination to withstand external pressures.
Ultimately, the evolving landscape of U.S.-China relations will have far-reaching implications for the global semiconductor market. As China enhances its resilience and strengthens international partnerships, the industry is likely to see shifts in the competitive dynamics that define this critical sector.
(Soure:www.reuters.com)
