Beijing.- Last October, plans to build a huge semiconductor factory owned by a major state-backed company in central China fell apart. The Biden administration had escalated the trade war over technology, cutting off China’s access to the Western tools and skilled workers it needed to build the most advanced semiconductors.
Some employees with US citizenship have left the company. Three US equipment suppliers almost immediately halted shipments and services, and Europe and Japan are expected to follow suit soon.
The facility belonged to Yangtze Memory Technologies Corporation, or YMTC, a memory chip company that Xi Jinping, China’s president, has hailed as a standard bearer in China’s race toward self-sufficiency. Now the chipmaker and its peers are scrambling overhauling supply chains and rewriting business plans.
Nearly seven months later, US trade barriers have accelerated China’s push for a more independent chip sector. Western technology and money have withdrawn, but state funding is pouring in to cultivate local alternatives to produce less advanced but still lucrative semiconductors. And China hasn’t given up on making high-end chips: Makers are trying to work with older parts from abroad that aren’t blocked by US sanctions, as well as less-advanced local equipment.
The tough US restrictions stemmed from the threat posed by China’s use of technology to improve its military arsenal. Jake Sullivan, the national security adviser, recently characterized the sentiment as part of a “new consensus” in Washington that decades of economic integration with China were not entirely successful, adding that the new controls were “carefully designed” to prevent for China to get such advanced semiconductors.
Under the October rules, US companies and citizens can no longer help any Chinese companies build chip technology that meets a certain sophistication threshold. The controls went beyond the Trump administration’s trade restrictions that went after specific companies like Chinese telecommunications giant Huawei.
