The Biden administration’s sweeping new export controls aimed at cutting off China from sourcing chips for supercomputers have caused the “complete collapse” of the communist country’s semiconductor industry, according to an expert.
“This is what the annihilation looks like: China’s semiconductor industry was reduced to zero overnight,” Lidang, CEO of Hedgehog Lab, said in a Twitter thread.
Rules announced last week by the US Department of Commerce banning “US persons” from being involved in the manufacture of chips in China had led to mass firings of American executives from Chinese companies.
Lidang said the result was that “Chinese manufacturing would be paralyzed overnight” and that the industry was in “complete collapse” with “no chance of survival”.
The rules, which came into effect on Oct. 12, would cause serious damage to “Chinese national security as a whole,” Lidang said.
“This is nothing compared to the 10+ rounds of performative sanctions during the Trump years — this is a serious act of industry-wide decapitation.”
The US Commerce Department said in a statement announcing the new controls that they were in response to China using supercomputers and semiconductors to create weapons of mass destruction and commit human rights abuses.
“The threat environment is ever-changing, and today we’re updating our policies to ensure we address the challenges presented by (China) as we continue our outreach and coordination with allies and partners,” Undersecretary for Industry and Security Alan Estevez said in a statement.
Semiconductors are used in everything from cars to refrigerators and are becoming increasingly important for artificial intelligence and advanced military programs.
The new measures included requirements for companies to hold licenses to export high-performance chips used in artificial intelligence and supercomputers, and restrictions on US companies from exporting chip-making machines to China.
Companies violating the sanctions could be arrested by the US Department of Justice.
The Chinese government hit back on Thursday, accusing Washington of “cold war thinking” and appealing for efforts to repair strained ties.
Experts said the new controls represent a significant escalation in tensions between Beijing and Washington.
“With recent action, the rift between the US and China has now widened to the point of no return,” Abishur Prakash, co-founder of the Center for Innovating the Future, told CNBC.
In August, Mr. Biden signed the Chips and Science Act into law that pledged $52 billion to revitalize semiconductor manufacturing in the United States.
The bipartisan legislation was seen as essential to national security interests in reducing reliance on Taiwan-made chips, which account for around 90 percent of the market.
Earlier this month, Micron announced plans to open a $100 billion chip manufacturing facility in Syracuse, New York that will create 50,000 jobs.
Mr. Biden called it “another victory for America and another massive new investment in America spurred by my economic plan,” the Associated Press reported.