US vs China: Chip Equipment Trade Tensions
The US aims to cut off China’s access to critical chip equipment, as highlighted by recent legislative moves. In response, China warns that this action will disrupt global semiconductor supply chains for everyone involved.
Key Points:
- China’s Ministry of Commerce expressed concerns over the US chip export legislation, particularly the MATCH Act.
- This act seeks to align export restrictions on advanced chip equipment between the US, Netherlands, and Japan, potentially cutting off ASML’s sales to China and banning service for existing machines.
- China has already implemented supply chain security regulations and rare earth restrictions, while the US is investing in domestic semiconductor capacity through the CHIPS Act and a $25B Terafab project.
The Legislation:
- MATCH Act (Multilateral Alignment of Technology Controls on Hardware): Requires Netherlands and Japan to align their chip equipment export restrictions with US rules within 150 days, or face unilateral US enforcement.
- Would expand the Foreign Direct Product Rule, giving the US jurisdiction over equipment containing any American technology, regardless of its manufacturing location.
- Targets specific Chinese companies like SMIC, Huawei, Hua Hong, CXMT, and YMTC.
The House Foreign Affairs Committee Markup:
On April 22nd, the committee advanced over 20 export control bills, including:
- MATCH Act: With bipartisan support, this bill aims to restrict chip equipment exports to specific Chinese facilities.
- Chip Security Act: Proposes requiring advanced chips to include location verification mechanisms to prevent unauthorized exports.
China argues that these actions will severely disrupt global supply chains and undermine stability in the semiconductor industry. The debate continues as both sides navigate the complex web of international trade and technological competition.