Chips: Chinese market too big to be ignored, expert says

As Washington considers tightening chip export restrictions on Beijing, some of United States' biggest semiconductor companies and an industry group have called on the US government to stop further controls, warning of diminished competitiveness, supply chain disruptions and "significant market uncertainty".

The move highlights how important China is to the US chip industry, as China is not just the world's largest semiconductor market but also a key link in US chip companies' supply chains, experts said.

In a statement published on Monday on its official website, the US-based Semiconductor Industry Association urged the US government to "refrain from further restrictions" on China. The CEOs of major US chip companies reportedly also visited Washington this week to voice their views on the US government's China policy.

It is important to allow the chip industry to have continued access to the Chinese market, which is the world's largest commercial market for commodity semiconductors, according to the statement.

The association urged the US government to engage "more extensively with industry and experts to assess the impact of current and potential restrictions to determine whether they are narrow and clearly defined, consistently applied, and fully coordinated with allies".

The statement came after media reported that Washington is considering a new round of restrictions on export of chipmaking equipment and technologies to China. Last year, the US government imposed a sweeping set of rules with the aim of containing China's technological development.

On Tuesday, Chinese Foreign Ministry spokeswoman Mao Ning said at a news conference in Beijing that China always opposes the politicization and weaponization of economic and trade issues.

"We hope that the US side will deliver US President Joe Biden's promise of not decoupling from China, not obstructing China's economic development and not containing China, and create a favorable environment for China-US economic and trade cooperation," Mao said.

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association in Beijing, said the US chip industry's reaction highlights China's vital role in its success. "China is too big a market for any chip company to ignore," Xiang said.

Last year, China's semiconductor purchases totaled $180 billion, accounting for around a third of the worldwide total of $555.9 billion, consolidating the country's status as the largest single market for semiconductors, according to the Semiconductor Industry Association.

Executives from US tech giants Nvidia, Qualcomm and Intel met on Monday with top officials in Washington to discuss the US government's China policy, Reuters quoted anonymous sources as saying.

"All the three companies are major leaders in semiconductor technology related to telecommunications. A huge percentage of their revenues come from China," George Koo, a retired international business adviser in Silicon Valley, told China Daily.

By instructing them not to sell to China, the Biden administration is "asking these companies to virtually commit suicide because they will be cutting off their own arm in the interest of Biden's protection of (so-called) national security", Koo said.

China is so important to a string of US tech companies that many CEOs visited the country this year to seek new business opportunities.

Intel CEO Patrick Gelsinger, for instance, visited Chengdu, Sichuan province, earlier this month to celebrate the 20th anniversary of its local plant, shortly after he made a trip to Beijing in April.