Chinese Chip Firms Play Down Impact of New U.S. Export Curbs

[para. 1][para. 2] Recent U.S. export restrictions target China's semiconductor industry by adding 140 companies, including 136 Chinese ones, onto the Entity List, banning access to U.S. advanced chip and AI technology. These measures also limit exports of high-bandwidth memory, crucial for AI growth. However, several affected Chinese companies believe the impact will be limited on their operations. [para. 3][para. 4] Notably, Naura Technology Group saw a 3.93% share drop, and Empyrean Technology shares fell by 1.97%, although Naura reported that being on the list won't largely affect its business. [para. 4][para. 5] Meanwhile, Empyrean views the impact as manageable due to its proprietary technology and plans to accelerate the localization of EDA tools. Wingtech Technology also evaluated that the restrictions have limited scope and won't hurt their sales and services significantly.

[para. 6][para. 7] China's Ministry of Commerce retaliated by banning exports of key minerals like gallium and germanium to the U.S., essential for semiconductors, LEDs, and photovoltaic cells, to preserve national security and interests. [para. 8] A ministry spokesperson accused the U.S. of unfairly restricting exports to China and violating international trade rules, impacting global supply chains. [para. 9][para. 10] This export control is the latest in a series targeted by the Biden administration against China's semiconductor sector, with several rounds of restrictions since October 2022, the most recent being in October 2023. Unlike previous measures focusing on chip design, the current ones target major domestic semiconductor equipment manufacturers more comprehensively.

[para. 12] Sources believe the crackdown might deter Chinese research and development timelines but also strengthen their resolve to innovate domestically. [para. 13] While short-term supply chain disruptions are expected, experts, like Everbright Securities' Gao Ruidong, maintain that the sector's long-term growth prospects remain intact. [para. 14][para. 15] The tech friction has led many Chinese manufacturers to seek domestic alternatives, achieving breakthroughs in areas like etching and ion implantation despite reluctance from some suppliers to substitute irreplaceable overseas parts.

[para. 16][para. 17] A technology industry analyst anticipates a manageable revenue impact on targeted companies by 2025, with challenges mainly in developing next-gen products sans U.S. components. The primary consequence of these U.S. restrictions is the deceleration of China's equipment R&D, compelling firms to locally develop globally sourced components. Despite these challenges, the industry's long-term growth is deemed likely to proceed unabated.