US Imposes Chip Restrictions Over Concerns Of Chinese Military's Use Of Semiconductor Technology

U.S. strategies are reportedly in full swing to decelerate China's progress in the semiconductor sector, imposing stringent restrictions on the procurement of vital spare parts for chip equipment.

These export limitations are part of a broader effort to deter China's technological strides in the semiconductor realm, a narrative that gained prominence following Huawei Technologies Co.'s launch of a 5G smartphone, which is equipped with an advanced 7-nanometer chip manufactured by China-based Semiconductor Manufacturing International Corp. (SMIC), according to a Bloomberg report, which cited Secretary of Commerce for Industry and Security Alan Estevez.

The U.S. has harbored apprehensions regarding China's military potentially leveraging advanced semiconductor technology, the report added.

See Also: Nvidia, United Airlines, Moderna, Lucid, Bank Of America: Why These Five Stocks Are On Investors' Horizons Today

The Ripple Effect of Export Restrictions

The impediment isn't just immediate. 

The longevity of these machines is also in question, as they're bound to require repairs, and the scarcity of components will notably hinder advancements in China's semiconductor ambitions, as explained in the Bloomberg report.

The U.S. isn't acting alone. It has also worked with Japan and the Netherlands to target China's acquisition of cutting-edge chipmaking technology and essential spare parts. 

While companies like ASML Holding NV (NASDAQ: ASML) continue to deliver sophisticated equipment to China, such transactions are expected to dwindle by 2024.

Export controls, however, might not be the silver bullet for all issues, especially when it comes to potential market flooding with lower-end chips by Chinese firms, the Bloomberg report said. 

Estevez pointed out to Bloomberg that other instruments, including various U.S. Acts, are available for tackling such complex trade scenarios.

On the flip side, the current restrictions imposed by the U.S. seem to be inadvertently benefiting certain market players. Companies like Nvidia Corporation (NASDAQ: NVDA) appear to be navigating these turbulent waters with finesse, capitalizing on the gaps left by Chinese firms grappling with the U.S. sanctions, as seen in their recent market performance and strategic moves.

Read Next: AMD Stock Surges The Most Since June As Microsoft CTO Hails Firm's AI Progress

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock