The 2024 US Chip Sanctions on China and China's Countermeasures: A Technological and Economic Game

The 2024 US Chip Sanctions on China and China's Countermeasures: A Technological and Economic GameThe escalation of US technological sanctions against China did not begin in 2024. Since 2018, the US has continuously imposed sanctions on Chinese semiconductor companies, placing numerous entities on the "Entity List" and employing various means to restrict China's access to advanced chip manufacturing technologies and equipment

The 2024 US Chip Sanctions on China and China's Countermeasures: A Technological and Economic Game

On December 2nd, 2024, the United States announced a new round of sanctions against China, adding 140 Chinese companies, mostly involved in semiconductor manufacturing, to its sanctions list. This move was not coincidental, coming as China is actively working to reduce its reliance on US chips and even planning to restrict exports of key chip raw materials to the US. This action ignited a fierce technological and economic confrontation between China and the US, with the victor yet to be determined. The security and reliability of "American chips" have also been called into question.

The escalation of US technological sanctions against China did not begin in 2024. Since 2018, the US has continuously imposed sanctions on Chinese semiconductor companies, placing numerous entities on the "Entity List" and employing various means to restrict China's access to advanced chip manufacturing technologies and equipment. This has been viewed as a strategic move by the US to leverage its technological advantage and curb the development of China's technology industry. The US aims not only to restrict China's chip industry but also to limit China's overall technological advancement through control of key technologies, thus impacting its economic development and international standing.

However, the US sanctions strategy is not foolproof. China has launched active countermeasures in response. On December 3rd, 2024, four major Chinese associations (internet, automotive, semiconductor, and communication) issued a joint statement urging caution in procuring US chips, stating that US chips are no longer reliable or secure. This statement demonstrates China's awareness of the risks of long-term reliance on the US chip supply chain and its determination to seek alternatives and reduce its dependence on the US. It also signifies China's commitment to technological independence and its rejection of US technological hegemony.

China's countermeasures extend beyond statements. On December 15th, 2024, the Ministry of Commerce announced a ban on exporting strategic products such as superhard materials, germanium, gallium, and antimony to the US. This ban garnered widespread international attention and is seen as a strong response to US sanctions.

These banned materials are crucial for modern industry and technological development. Superhard materials, such as diamond, cubic boron nitride, silicon carbide, and boron carbide, are core components in various high-end manufacturing industries, widely used in aerospace and defense sectors. China holds a global leading position in superhard material production, accounting for over 95% of global diamond production and over 70% of cubic boron nitride production. This means China's export controls on these materials will significantly impact countries and companies that rely on them, including the US.

Germanium plays a key role in the semiconductor industry. Its good compatibility with silicon improves chip performance and speed. China possesses 41% of the world's germanium reserves and over 90% of its production. This allows China to leverage its germanium advantage to counter the US semiconductor industry.

Gallium and antimony are also important semiconductor materials, and China also possesses abundant reserves and production capacity. By controlling the export of these key materials, China can weaken the US semiconductor industry, potentially achieving a crippling effect.

The US strategy of containing China's chip industry involves not only unilateral sanctions but also collaboration with allies to implement a chip blockade. Japan strengthened export controls on 23 types of high-performance semiconductor manufacturing equipment to China, while South Korea briefly joined the Chip Four Alliance, participating in chip controls against China. These actions collectively constitute a comprehensive blockade strategy by the US and its allies against China's technological development.

However, China's counter-strategy doesn't solely rely on raw material control. China is the world's largest consumer of chips, accounting for over one-third of global consumption. China can utilize its massive market share to influence the global chip industry landscape. For example, by reducing imports of South Korean chips, China has forced a surge in South Korean chip inventories, significantly impacting the South Korean economy. This illustrates that US and allied technological sanctions against China also face backlash from the Chinese market.

More importantly, China's domestic chip industry is rapidly developing. Companies like SMIC and GigaDevice have achieved mass production of 28nm and 14nm chips, while Innosilicon has broken through 7nm mass production, and Huawei's Kirin chips are actively being developed for high-end processes. These advancements demonstrate significant achievements in China's independent chip research and development, gradually reducing reliance on foreign chips.

Although China still lags in high-end chip manufacturing, this doesn't mean it lacks competitiveness. China already possesses a certain level of independent R&D capability and is actively catching up. Simultaneously, China is strengthening technological innovation, increasing R&D investment, and cultivating technological talent to counter external technological blockades. China's goal in technological development is not merely to catch up, but to surpass, requiring long-term efforts and strategic planning.

This technological and economic game between China and the US is far from being decided in the short term. The US seeks to curb China's development through technological sanctions, while China responds with countermeasures and independent innovation. The ultimate outcome will depend on the comprehensive strength of both sides in technology, economics, and politics, as well as their strategic choices. This game not only concerns the future of China and the US but also has profound implications for the global technological landscape. It will drive the reshaping of the global technology supply chain and accelerate global technological competition.

Sources: Global Times ["Regarding US Chips, Four Chinese Associations Issue a Statement!"], 21st Century Business Herald ["Chip Battlefield | The US Aggressively Escalates Semiconductor Controls on China: 140 Companies Added to the 'Entity List', Restricting Equipment Suppliers and HBM"], Cailian Press ["Export Controls on Gallium, Germanium, Antimony, and Superhard Materials to the US; Yunnan Germanium Industry, etc., Close Up 20% Higher; Nearly 20 Listed Companies Respond to Relevant Business on Interactive Platform"]

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