chip Photo:VCG

The US Department of Commerce last week ordered multiple chip equipment companies to halt certain tool shipments to China's second-largest chipmaker, Huahong, in the US latest action trying to curb China's development of advanced chips, Reuters reported on Wednesday citing sources. Chinese experts said repeated US attempts to curb China's advanced chip development are political moves that disrupt global supply chains and are unlikely to halt China's semiconductor progress. Instead, they may spur China's domestic investment and innovation while causing US companies to lose market opportunities.

The US department sent letters to at least a handful of companies informing them of the new restrictions on tools and other materials destined for two Huahong facilities that US officials believe may make China's most sophisticated chips, according to two people familiar with the matter, Reuters reported.

Top US chip equipment companies Lam Research, Applied Materials and KLA, each of which has significant business supplying China, were among those believed to have received a letter, the sources told Reuters.

Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times that recent US measures aimed at blocking Chinese companies from using certain chip design tools reflect a recurring trade protectionist mindset, politicizing economic and trade relations and disrupting global supply chains. 

"Whether such measures can actually achieve their goals is questionable," he added, pointing out that China's semiconductor industry is growing too rapidly for Washington's approach to be effective.

He stressed that the global semiconductor industry is an integrated ecosystem, and countries should pursue win-win cooperation to advance technology rather than impose unilateral restrictions.

Reuters exclusively reported in March that Huahong Group had developed advanced chip manufacturing technologies that could be used to produce artificial intelligence (AI) chips.

The group's contract chipmaking business, Huali Microelectronics, was preparing a 7-nanometer chipmaking process at its Shanghai plant, sources said, Reuters reported.

Zhou said that in some restricted areas, Chinese firms have accelerated their development. The restrictions reshaped the market, prompting domestic companies to invest more resources and strengthen their industrial capabilities, while US suppliers lost access to a key market.

In recent years, the US Commerce Department has restricted US companies from shipping equipment to Chinese factories producing advanced chips as part of an effort to maintain US' lead in making AI and other advanced chips, Reuters reported.

US chip equipment companies and other suppliers could lose billions of dollars in sales, one of the people said, especially if they were supplying a chipmaking plant that is under construction, or one that is retooling to begin making more advanced chips, according to Reuters report. 

Ma Jihua, a veteran tech industry analyst, told the Global Times on Wednesday that the US Department of Commerce has repeatedly applied targeted restrictions on Chinese semiconductor companies it deems a "threat," aiming to maintain Washington's dominance in the chip sector. "In essence, they amount to blatant unfair commercial competition and exemplify the politicization of trade," Ma said.

Ma added that despite continued suppression, China's semiconductor industry has grown increasingly strong. "The more the US cracks down, the faster Chinese companies advance. The repeated blacklisting has created a cycle of pressure and breakthrough, while the marginal gains of US policy continue to diminish" he said, noting  Chinese firms are growing ever less intimidated by these threats and restrictions as Washington's restrictive policies become less effective.  China on Saturday warned against a package of export control legislation of the US House of Representatives, reiterating its opposition to the over-extension of the concept of national security and the abuse of export controls.

The US House Foreign Affairs Committee recently passed the Multilateral Alignment of Technology Controls on Hardware, known as the MATCH Act, and several other export control bills.

A spokesperson of the Chinese Ministry of Commerce said if enacted, the relevant bills would seriously undermine the international economic and trade order and significantly disrupt the stability of global semiconductor industrial and supply chains.

China will closely monitor the legislative process, carefully assess the impact on Chinese interests, and take resolute and necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises, the spokesperson said.