The escalating technology rivalry between the United States and China has reached new heights as Beijing issues a stark warning to domestic companies to avoid American-made chips, labeling them “unsafe.” This comes in direct retaliation to Washington’s latest round of semiconductor export restrictions, which aim to curtail China’s access to advanced technologies critical for artificial intelligence (AI) and military applications.
Sweeping US Restrictions
On Monday, the Biden administration announced its third set of semiconductor export curbs in three years, targeting China’s ability to acquire high-bandwidth memory chips, advanced AI tools, and semiconductor manufacturing equipment. “These measures are the strongest controls ever enacted by the US to degrade the PRC’s ability to make the most advanced chips that they’re using in their military modernization,” Secretary of Commerce Gina Raimondo said.
The new rules close loopholes from prior restrictions, including October 2022 measures, further tightening China’s access to cutting-edge components. The US maintains that these moves are essential for national security, aiming to disrupt China’s military advancements and global technological ambitions.
Beijing Strikes Back
China has condemned the restrictions as acts of “unilateral bullying” that destabilize global supply chains. In response, Beijing has ramped up efforts to achieve technological self-reliance while implementing its own export bans on key materials like gallium and germanium, essential for semiconductor and battery production. The Chinese Commerce Ministry stated that these materials, previously available under special export permits, are now restricted due to potential military applications.
Adding to the tension, four prominent Chinese industry associations have advised domestic companies to stop purchasing US chips, urging them to prioritize local or non-American alternatives. “US products are no longer safe,” warned the Internet Society of China, while other groups called for investigations into the reliability of American-made chips used in critical infrastructure.
Impact on Global Industry
This retaliatory move could hit major American chipmakers like Nvidia, AMD, and Intel, whose sales to China have remained robust despite US-imposed restrictions. The semiconductor industry, a linchpin of global technological innovation, is now being reshaped by this growing trade war, with both nations doubling down on investment and protectionism.
China has launched a $47.5 billion state-backed investment fund to bolster domestic chip production, a key element of President Xi Jinping’s strategy to establish China as a global tech superpower. Analysts believe these efforts could significantly accelerate the decoupling of US and Chinese supply chains.
Broader Geopolitical Tensions
The chip battle is unfolding amid heightened geopolitical friction, including fears of a potential Chinese invasion of Taiwan. Taiwan, a key ally of the US and the hub of global semiconductor production, remains at the heart of this technological and military rivalry. The US has repeatedly emphasized the strategic importance of Taiwan’s chip manufacturing capabilities in safeguarding global technology leadership.
As the US and China push further into a tech-driven cold war, the stakes for global innovation, supply chain stability, and economic growth continue to rise. Whether these tit-for-tat measures will foster resilience or deepen the divide remains to be seen.