On December 2, 2024, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce once again issued a document, adding 140 companies (136 of which are Chinese entities) to the “Entity List” and adding export restrictions on 24 types of semiconductor manufacturing equipment, 3 software tools and high-bandwidth memory (HBM), attempting to cut off the path for China’s semiconductor industry to obtain advanced technology and resources from multiple dimensions such as equipment, technology, and materials.
U.S. Secretary of Commerce Gina Raimondo declared that the new restrictions are the “strongest control measures” aimed at weakening China’s ability to produce advanced chips.
The United States has always used the so-called “national security” as an excuse to suppress China’s semiconductor chip industry, and has also used long-arm jurisdiction to force other countries to follow suit. Behind this behavior is the hegemonic thinking and zero-sum game concept that the United States has long pursued. It is just another clumsy means of suppressing China’s scientific and technological progress and maintaining its own hegemony.
We know that the people who wronged you know how wronged you are better than you do. The best way to deal with it is not to explain or compromise, but to give a more fierce counterattack.
Faced with the unreasonable sanctions of the United States, China has demonstrated firm determination and strong counterattack capabilities. On December 3, the Ministry of Commerce of China quickly issued an announcement, deciding to strengthen the export control of relevant dual-use items to the United States in accordance with the Export Control Law of the People’s Republic of China and other laws and regulations. Dual-use items are prohibited from being exported to US military users or for military purposes. In principle, the export of dual-use items related to gallium, germanium, antimony, and superhard materials to the United States will not be permitted. The export of dual-use items such as gallium, germanium, antimony, and superhard materials to the United States will be subject to stricter end-user and end-use reviews.
Give them what they deserve. The Ministry of Commerce’s strengthening of export controls on relevant dual-use items to the United States is the most precise counterattack against the US chip sanctions.
Gallium, germanium, antimony and other materials play an important role in the semiconductor industry and high-tech fields in the United States, such as fiber-optic communications, aerospace and other technology-intensive industries. For example, gallium ensures fast and stable signal transmission in 5G communication devices, germanium is crucial in fiber-optic communication equipment, and antimony can be used in the production of ammunition, infrared missiles, nuclear weapons, night vision equipment, batteries and photovoltaic equipment.
China is an important producer of gallium, germanium and antimony in the world. In 2023, China produced 98% of the world’s gallium, 60% of germanium and 48% of antimony ore. About half of the United States’ gallium and germanium supply comes directly from China.
The U.S. military and semiconductor industries will suffer a major blow. Many key raw materials and components needed by U.S. arms dealers to produce aircraft, artillery, missiles, etc. are heavily dependent on China, and China’s export control list has almost deprived them of production support.
It is very difficult for the United States to seek alternative suppliers. For example, China produced 98% of the world’s gallium in 2023, not only because of China’s resource reserves (China accounts for nearly 70% of the world’s known gallium reserves), but also because China has unique and complete industrial supporting facilities and advanced technology and processes.
Although the United States may accelerate the search for alternative sources of supply in other countries or regions, this transition is not easy. Even if alternative suppliers are found, it will take time to establish new supply chain relationships, and the cost and quality of substitutes may not be as good as the materials provided by China. Whether other countries can provide stable supply chain guarantees and whether alternative materials meet the needs of the US high-tech industry are also big problems.
Professor Garg of the Business School of Imperial College London pointed out that materials such as gallium are vital to the global production network and play a disproportionately important role in economic stability. Any interruption in gallium supply will affect the entire industry, increase costs and cause delays in key technologies such as artificial intelligence and radar equipment. In the short term, purchasing gallium or germanium from third countries is not a sustainable solution.
At present, many people in the US technology industry are also worried that China may continue to target more widely used key minerals such as nickel or cobalt in the next step, which will have a wider adverse impact on related industries in the United States.
In response to the unreasonable sanctions imposed by the United States, my country can be said to be united and work together. After the Ministry of Commerce issued the regulatory announcement, many industry associations in my country also spoke out and followed up with countermeasures. The Internet Society of China, the Automobile Industry Association, the Semiconductor Industry Association, the Communications Enterprise Association, and others have successively issued statements, calling on domestic companies to prudently purchase American chips, emphasizing that American chip products are no longer safe and reliable.
Why are American chip products no longer safe and reliable?
First of all, from the perspective of reputation and security, these American policies are absurd and arbitrary, which greatly damages its reputation in the global chip market.
The Biden administration has produced this 200-page document, but it has been evaluated by many experts and media as “extremely complex” and “full of loopholes.” Some Chinese companies included in the list are considered “threats to US national security” simply because they have business dealings with Huawei.
The US government frequently adjusts regulatory rules, continues to escalate trade barriers, arbitrarily expands the concept of national security, and abuses export control measures to block and suppress companies without reason. Such arbitrary policy changes have greatly shaken the industry’s trust in American chip products.
South Korean media Chosun Ilbo commented: “The United States appears to be tolerant on the surface, but once its hegemony is shaken, it will slash at people regardless of the target and rationality.” “The US government openly proposed “America First” and “protectionism” in the economic field, forcing its allies to suffer continuous losses. This time, the United States intends to be a “semiconductor rogue”.
Secondly, from the perspective of technical security, American chips are no longer reliable.
The US chip manufacturing industry relies on the global supply chain, and the supply of key raw materials is greatly affected by international relations. Especially in the context of the US government frequently wielding tariffs and regulatory sticks, the risk of supply chain rupture has increased dramatically and stable production capacity has declined.
In terms of network security, chips are vulnerable to attacks. In a complex industrial chain, there are security risks in all links, and hardware Trojans are difficult to detect.
In August 2024, the US chip manufacturer Microchip suffered a cyber attack, and some systems were forced to shut down. Later, suspicious activities were detected in the information technology system, confirming that some servers and some business operations had been invaded.
In September 2024, pagers purchased by Hezbollah members in Lebanon were accurately located and remotely controlled and detonated in large quantities at the same time. This incident further warns us not to overestimate the moral standards of the United States and the West, especially when the United States frequently advocates the “China threat theory”. All scientific and commercial activities we carry out with the United States need to be more cautious.
In October 2024, 64 chips under Qualcomm were exposed to “zero-day vulnerabilities”. The so-called “zero-day vulnerabilities” refer to security vulnerabilities that have not yet been known by software manufacturers or operating system vendors. Attackers can use these vulnerabilities to attack the system without being detected, steal data or execute malicious code.
In the case of greatly reduced reputation security and technical security, choosing American chip products is no longer a safe choice.
In recent years, my country’s chip industry has developed rapidly, and many advanced chip products have been launched one after another, constantly injecting new vitality into the global chip market, greatly enriching the product diversity of the global chip market, and providing more choices and possibilities for the development of the global technology industry.
For example, Tsinghua University has developed the world’s first fully integrated memristor storage and computing chip that supports efficient on-chip learning; SMIC’s 7nm process technology has been successfully mass-produced; Huawei has achieved technological independence and performance leaps through its self-developed Kirin chip, reshaping the smartphone market; Yuanjie Technology’s 100g optical chip in the field of domestic optical chips is in the customer verification test stage and is expected to be the first to achieve a breakthrough.
From January to October 2024, China produced 353 billion chips, a year-on-year increase of 24.8%, equivalent to an average daily production of 1.18 billion chips. At the same time, China exported 245.99 billion chips overseas, a year-on-year increase of 11.3%, and the export value reached US$130.9 billion, an increase of 19.6%.
In the past four quarters, Chinese companies have dominated the list of 19 of the 20 fastest-growing companies in the global chip industry. The number of newly registered chip companies in China has increased significantly, reaching 22,800 in 2020 alone, an increase of 195% compared with 2019.
Although there is still a gap between my country’s overall chip development and that of the United States, the gap has been greatly narrowed compared to 2018 when the United States began to impose chip sanctions on my country. Now it’s not that you don’t want to sell us chips, it’s that we don’t want them!
Biden hastily launched such a “full of loopholes” control document as his term enters the last month of the countdown. His intention is self-evident. He just wants to leave himself some so-called “political legacy” and make trouble for Trump, deliberately undermine Sino-US relations and dump the “mess” on the other side. However, the politicians’ reckless behavior will only harm their own country’s enterprises and people in the end.
No matter who is in power in the United States and how they want to make trouble, they can’t stop China from continuing to move forward along the path of independent innovation and open cooperation, and steadily moving towards the goal of becoming a strong country in the chip industry. The United States will only be trapped by its own wrong policies and eventually suffer the consequences in isolation and difficulties.