Chinese chip stocks tumble after U.S. calls for new curbs on high-end tech

By | January 27, 2024

A worker at a chips factory in Chongqing, China, on March 30, 2022.

Future Publishing | Future Publishing | Getty Images

Infrastructure spending is becoming important again as China's economy faces downside risks: UBS

The U.S. said it would grant a temporary license from Oct. 21 through to April next year to allow businesses to manufacture some of the high-tech products in China for use outside the country.

Chinese chips stocks tumble

“Such practice runs counter to the principle of fair competition and international trade rules,” she said. “It will not only harm Chinese companies’ legitimate rights and interests, but also hurt the interests of U.S. companies.”

Mao did not mention any plans for Chinese countermeasures.

The global semiconductor supply chain is highly specialized. Only a few companies have the most advanced tech, while China has been heavily investing in domestic players in an attempt to catch up.

Taiwan Semiconductor Manufacturing Company dominates the manufacturing capacity for the world’s most advanced semiconductors. Netherlands-based ASML is the world’s only company able to make the highly complex machines that are needed to produce the most advanced chips.

On the other hand, U.S. companies such as Lam Research, KLA and Applied Materials are industry leaders for other tools needed to make chips.

Assessing the damage

Read more about tech and crypto from CNBC Pro

The U.S. Bureau of Industry and Security estimated the latest rule changes mean it will receive at least an additional 1,600 new license applications a year.

International cooperation is also needed, a senior U.S. government official said in a briefing Thursday, Reuters reported.

“We recognize that the unilateral controls we’re putting into place will lose effectiveness over time if other countries don’t join us,” the official said in the report. “And we risk harming U.S. technology leadership if foreign competitors are not subject to similar controls.”

The U.S. embassy in Beijing did not immediately respond to a CNBC request for comment on the report.