US Chip Group Warns Against More China Sanctions

The US-based Semiconductor Industry Association (SIA) has urged the US administration against further limits on chip exports to China, warning they could destabilise the domestic chip industry.

The move came as executives from the country’s biggest chip firms, including Intel, Nvidia and Qualcomm, meet with government officials on Monday in Washington DC to express their views on China policy, Reuters reported.

The SIA praised the US’ Chips and Science Act, designed to bring more chip manufacturing to US shores, but said access to China’s chip market was “important to avoid undermining the positive impact of this effort”.

China represents the world’s largest commercial market for commodity semiconductors, the SIA noted.

‘Ambiguous’ rules

The industry group warned against “ambiguous” new rules that could invite retaliation from China.

“Repeated steps… to impose overly broad, ambiguous, and at times unilateral restrictions risk diminishing the US semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China,” the SIA said in a Monday statement.

China recently placed restrictions on exports of raw materials critical to chipmaking, including gallium and germanium, in a move seen as retaliation for US policies.

The SIA called on the US and Chinese governments to “ease tensions” and for the US to “refrain from further restrictions” until it has engaged with industry and experts to “assess the impact of current and potential restrictions”.

Destabilisation risk

Any further moves should be “narrow and clearly defined, consistently applied, and fully coordinated with allies”, the SIA argued.

The White House National Security Council said in response that its “actions have been carefully tailored to focus on technology with national security implications, and designed to ensure that US and allied technologies are not used to undermine our national security”.

The Biden administration is reportedly considering updating export rules issued last October that banned sales of high-end chips and chipmaking equipment to China.

Those rules were initially unilateral, although the US later convinced the Netherlands and Japan to introduce similar restrictions.

The US administration is also reportedly considering an executive order that could restrict outbound investment into Chinese artificial intelligence firms, amongst other areas.

‘Highly targeted’

Upon concluding a high-level visit to China earlier this month, Treasury secretary Janet Yellen said no final decision had been made on imposing new limits.

“I was able to explain to my Chinese counterparts that if we do implement such restrictions that we will do so in a transparent way,” Yellen said at the time.

Any new sanctions will “be highly targeted and clearly directed narrowly at a few sectors where we have specific national security concerns,” she said.

“I want to allay their fears that we would do something that would have broad-based impacts on the Chinese economy. That’s not the case. That’s not the intention,” Yellen added.