From the year 2018 there is a trade war going on between the US and China. It was initiated by then-President Donald Trump as a response to China’s aggressive and anti-American policies. For several years now, China has had ambitions to become the world’s dominant country, its economic development in recent years has been very intense, and its population also works in its favor. In 2021, Americans banned Chinese giant Huawei from selling and operating on their soil due to suspicions of collecting data on American citizens. All these steps indicated the U.S. approach to the Chinese and were intended to frighten the Chinese and strengthen the American position in the world, but they were not on the same scale as those of October 7 of this year, the U.S. Department of Commerce introduced a new package of regulations governing the export of certain types of processors and inputs to the People’s Republic of China.

Why is it so important? Because it also comprehensively regulated the export of tools (machinery and software) for production located in China, as well as cooperation with Chinese entities producing apparatus of this type. The law also requires licenses to be obtained by U.S. citizens and residents who wish to “encourage the development or manufacture” of specific processor types in the PRC. Advanced DRAM and NAND memory and semiconductors with transistor sizes of less than 14 to 16 nanometers, which are employed in the development of artificial intelligence, supercomputers, contemporary military systems, as well as cutting-edge consumer electronics, are included in the limits.
Why are the Americans sanctioning the Chinese in this way?
This is because the Chinese have not yet developed the technology to produce the latest generation of processors and their production is based on Western companies and their specialists. The main producer of processors in the world is Taiwan, other important countries are, of course, the United States but also the Netherlands. However, under the new rule, license requests from global firms producing processors in the PRC, particularly for export markets, would be taken into account. The goal of US politicians is to prevent a severe upheaval of how the world’s supply networks operate. Among others, the Korean corporation SK hynix and the Taiwanese powerhouse TSMC have received temporary licenses (typically valid for one year) to continue using American equipment in China. These companies claim no appreciable impact to their business operations in the PRC.

The US Department of Commerce claims that Washington coordinated the law’s introduction with important allies. The effects of the Americans’ decision were immediately apparent through the suspension of operations of many Chinese companies. Leading semiconductor businesses’ stock values on local exchanges as well as those of Asian suppliers exporting to the PRC have both decreased because of the limitations. Several specialist semiconductor tool production and maintenance businesses, including the US-based Applied Materials, the Dutch ASML subsidiaries with US locations, KLA Corporation, and Lam Research, have stopped working with Chinese contractors. They have immediately stopped delivering machines and cutting off all contact with PRC clients while also removing their technicians from Chinese enterprises “waiting for the determination of the effects of the sanctions.” Chinese business portals have reported that a wave of layoffs among managers and researchers with American citizenship has resulted from the limitations (usually of Chinese or Taiwanese origin). This has started to result in disruptions to the supply chain. The emerging consensus of industry experts, however, says that China’s latest-generation semiconductor industry is expected to collapse dramatically, at least in the short term.
This situation is another example of escalation between China and the U.S., given that China claims rights to Taiwan, which is currently the largest producer of processors and semiconductors, it clearly indicates a place to which attention must be paid in the future and which may become the next field of military action after Ukraine.

Reference:
- https://www.osw.waw.pl/pl/publikacje/analizy/2022-10-19/amerykanski-cios-w-chinski-sektor-produkcji-procesorow
- https://www.vox.com/world/2022/11/5/23440525/biden-administration-semiconductor-export-ban-china
- https://www.bloomberg.com/news/articles/2022-11-01/us-ban-on-americans-aiding-china-chip-firms-narrower-than-feared?leadSource=uverify%20wall
- https://www.youtube.com/watch?v=__x2koi3xlI&ab_channel=GoodTimesBadTimesPL






