Chinese Government Protests Strongly Against US New Chip Restrictions

JAKARTA - The Chinese government has issued a firm protest against the United States over the latest restrictions on chip exports. Hakl was conveyed by China's foreign ministry on Wednesday, October 18 after the Joe Biden administration published new measures to limit Beijing's access to advanced technology.

"With forced restrictions and layoffs for political purposes, this violates market economic principles and fair competition," the ministry said in its response to a question from Reuters.

The US has said it does not want to hinder China's economic development, and China hopes the US will comply with this rather than just say one thing and do another.

On Tuesday, October 17, Washington announced plans to halt deliveries to China of a more advanced artificial intelligence chip designed by Nvidia and other companies.

They also limit a number of advanced chips and chip manufacturing tools to a number of countries including Iran and Russia, as well as blacklist Chinese chip designers, Moore Threads and Biren.

China's Semiconductor CSI Index fell 1.4% last Wednesday following this announcement, while the STAR Chip Index lost 1.2%. An index that tracks Chinese artificial intelligence (AI) companies closed 1.8% lower after hitting its lowest level in nine months.

AI shares were further hit after the US announced further control over Nvidia's chip exports to China, UBS wrote in a note to clients.

Yang Wang, a senior analyst at Counterpoint, said he expected only limited disruption to China's AI industry given that many have been preparing for this restriction and storing chip stocks. However, the impact could be more pronounced in the medium to long term and could make the gap between China and global competitors in AI even bigger in the coming years.

Charlie Chai, analyst at 86Research, said the restrictions were likely to further increase the self-sufficiency agenda being pushed by Chinese President Xi Jinping.

While Nvidia will not be able to sell multiple AI chips to China, this new rule will also prevent advanced technologies from being used to manufacture chips designed by its two best competitors, Biren and Moore Threads, a Chinese startup founded by former Nvidia employees.

Biren said Tuesday that it was evaluating the possible impact on the company and would appeal to the US government to review the decision. Moore Threads said they were communicating with all parties involved and were evaluating the impact.