Sino-US chip war map
Huang Yuliang | Moment | Getty Images
Despite Washington’s efforts to limit chip sales to China and Beijing’s push for self-sufficiency in the semiconductor industry, China remains an important market for most U.S. chipmakers.
Data from S&P Global Shows that U.S. chip giant Intel, Broadcom, Qualcomm and Mayville Technology All of these countries receive more revenue from China than the United States
The United States has passed a series of export controls starting in October 2022, aiming to restrict China’s access to advanced chip technology, especially technology used in artificial intelligence applications.
Chris Miller, author of “Chip Wars,” said: “China remains an important market for U.S. chip manufacturers, and U.S. restrictions on the sale of advanced artificial intelligence chips to China are specifically designed to allow most U.S. companies to continue to sell Chinese customers Designed to sell most types of wafers,” told CNBC.
Semiconductors are used in products ranging from smartphones to electric vehicles and have become a top priority for governments around the world.
China consumes nearly 50% of the world’s semiconductors as it is the largest market for consumer device assembly, according to technology consultancy Omdia.
Because U.S. export restrictions target very specific products, U.S. chipmakers, which enjoy a technological lead over Chinese rivals, are able to take advantage of the demand.
“There are still a lot of ‘high-end’ chips with various types of permitted use cases that are ideally suited to areas where U.S. chip companies dominate and lead,” said William B. Bailey, chief technology, media and telecommunications analyst. Starkey IR Intelligence.
Dealing with export restrictions
U.S. chipmakers, even those that do most of their business in the U.S., e.g. Micron Technology, AMDand Nvidiaeven in the face of export controls, still strive to provide services to Chinese customers.
When the first wave of U.S. restrictions took effect in late 2022, Nvidia and Intel designed modified versions of their AI chip products for the Chinese market.
A year later, the United States updated its export rules to address these apparent loopholes. But soon after, reports surfaced that Nvidia was developing a new chip specifically made for China.
Intel is reportedly continuing to sell hundreds of millions of dollars worth of laptop processor chips to U.S.-sanctioned Chinese telecommunications company Huawei thanks to export licenses issued by the Donald Trump administration.
The company did not respond to a request for comment on its plans for the China market.
AMD also designed an artificial intelligence chip for China, but it failed to pass muster with U.S. regulators last month and needed to apply for an export license.
Senior executives at Intel, Qualcomm and Nvidia It is said Last July, the group planned to lobby Washington against tighter chip restrictions.
The companies are also members of the Semiconductor Industry Association, the main U.S. semiconductor trade group. issue a statement Around the same time, calls were made to ease tensions and halt further sanctions due to the importance of the Chinese market to domestic chip companies.
While the United States has taken a tough policy stance, China has responded in kind. In May last year, chips produced by the US company Micron were banned from being used in China’s critical information infrastructure because they failed to pass the review of the Cyberspace Administration of China.
A Micron Technology spokesperson told CNBC that Micron Technology is building a new assembly and test manufacturing facility at its existing base in Xi’an, China, because China “remains an important market for Micron Technology and the semiconductor industry.” Production is expected to begin in the second half of 2025, they said.
Market share concerns
China has been trying to become self-reliant and build a domestic semiconductor industry in response to countries such as the United States and the Netherlands restricting its access to advanced technology.
Beijing has provided billions of yuan in subsidies to chip companies to boost domestic manufacturing.
Huawei Mate 60 Pro smartphone analysis Technical Insights Advanced chips manufactured by China’s top chipmaker SMIC are on display. The smartphone is also said to be equipped with 5G connectivity – a technology that US sanctions aim to prevent Huawei from using.
Miller said the Chinese government is “increasingly focused” on getting its companies to buy locally made chips. “Unless foreign companies have significant technological advantages over domestic Chinese competitors, they will lose market share in China.”
However, Felix Lee, an equity analyst at Morningstar, said that while Chinese companies may be innovating traditional chips in everything from home appliances to medical equipment, the company does not expect to “overhaul the supply chain.”
Traditional wafers are typically mature or low-end semiconductors.U.S. Commerce Secretary Gina Raimondo said About 60% of the chips are made in China.
Brady Wang, deputy director of Counterpoint Research, said that in the AI GPU segment, U.S. companies such as Nvidia and Intel are expected to be about three to five years ahead of their Chinese competitors in terms of technology.
“We believe China can still establish its own local GPU supply chain for specific market segments, but the quantity will be limited and the cost will be higher,” he added.
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