China’s chip ambitions are being tested again as fresh US sanctions, the third escalation in three years, hit more broadly across the semiconductor supply chain, industry insiders said.
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The US Commerce Department, which oversees export controls, added 140 Chinese chip-related organisations to a trade blacklist and placed additional restrictions on China’s access to semiconductor manufacturing tools in a major escalation by Washington to cripple China’s chip technology progress.
Compared with previous sanctions, the US is targeting firms deeper in China’s semiconductor supply chain that provide essential support for replacing foreign technologies as part of China’s state-backed chip independence initiative.
At the same time, many Chinese companies are downplaying the potential impact of being placed on Washington’s so-called Entity List, saying their localisation efforts in recent years largely insulate them from the worst effects.
“The market has already anticipated this, and because relevant companies have made preparations in advance, we believe the actual impact will be limited in the short term,” said Chinese state-backed investment bank Citic Securities in a note, adding that the new sanctions are expected to further accelerate the localisation of the entire supply chain.
Targeted companies include key players in the semiconductor supply chain, including equipment maker Naura Technology Group, cleaning tool maker AMC Research, metrology and inspection tool supplier Skyverse Technology, semiconductor design software developer Empyrean Technology, and photoresist materials supplier Nanda Optoelectronic Semiconductor Materials. These additions restrict their ability to import Western technologies and conduct business with companies using US-origin technology and software.