China trade group warns US-led chip export controls threaten whole industry

A Chinese state-backed semiconductor trade group has warned that the United States-led pact with Japan and the Netherlands to further restrict China’s access to chip-making technology poses a threat to the entire industry and marks a step back in the era of free trade.

“China Semiconductor Industry Association (CSIA) firmly protests against such acts that destroy the global semiconductor ecosystem,” the 744-member trade body said in a statement published on its website on Wednesday, condemning “inappropriate intervention by governments and authorities”. It also called for increased support for globalisation and resistance to efforts that destabilise supply and demand.

“We oppose such acts that exclude China’s semiconductor industry from the global innovation system and free-market competition,” the group said.

CSIA’s response comes about two weeks after the US, Japan and the Netherlands reportedly reached an agreement to impose export controls against China covering certain chip-making equipment, such as ArF Immersion deep ultraviolet lithography machines, a move that would undercut Beijing’s ambitions to build up the country’s semiconductor capabilities. Details of the trilateral deal have not been made public.

At a briefing on January 30, Chinese Foreign Ministry spokeswoman Mao Ning said the US-led agreement is not only harmful to all concerned parties, but threatens the stability of the global semiconductor supply chain.

Dutch chip making equipment supplier ASML Holding, which is barred from selling its most-advanced lithography machines to China, said in its latest annual report that any new restrictions would take months to draw up and enact.

The concerns raised by CSIA highlight the potential damage of increased US pressure on China’s semiconductor industry, months after Washington implemented updates that further restrict China’s ability to obtain advanced chips and US President Joe Biden signed into law the Chips and Science Act to boost America’s hi-tech manufacturing capabilities.

China’s strongest response so far to the US government’s trade restrictions was its decision in December to file a complaint with the World Trade Organization’s dispute-settlement body to challenge what the Ministry of Commerce described as “a typical practice of trade protectionism”.

A month before the unilateral export restrictions by the US in October, the CSIA had advocated for China’s increased self-reliance in innovating and developing its own core technologies.

Core technologies, however, are China’s Achilles’ heel, despite having the world’s strongest industrial manufacturing capability. The country’s semiconductor foundries continue to depend on imported tools in their operations, making them easy prey for Washington in its strategy of tech containment. South China Morning Post