American chips ‘no longer safe’, Chinese industry says

Chinese companies should be wary of buying US chips because they are “no longer safe” and should instead buy locally, four of the country’s major industry associations said on Tuesday, in a rare coordinated response to restrictions imposed by Washington on Chinese microprocessor makers .

The two nations have attacked each other’s economies in recent days, raising tensions even before US President-elect Donald Trump returns to the White House in January. Trump has vowed to impose heavy tariffs on imported Chinese goods, reviving a trade war from his first four-year term as president.

The industry association’s warnings came after the United States on Monday launched its third round of crackdowns in three years on China’s semiconductor sector, limiting exports to 140 companies, including microprocessor equipment maker Naura Technology Group.

The opinion could hit US giants such as Nvidia, AMD and Intel which, despite export controls, have managed to continue selling products on the Chinese market. The three companies did not immediately respond to Reuters’ request for comment.

“China has moved rather slowly or cautiously in terms of retaliating against U.S. actions, but it seems pretty clear that the gloves are now off,” said Tom Nunlist, associate director at research firm Trivium China .

The associations cover some of China’s largest sectors, including telecommunications, digital economy, automobiles and semiconductors, and together have 6,400 member companies.

The statements, released within short intervals of each other, do not explain in detail why the US chips are not secure or reliable.

Beijing on Tuesday also banned exports of rare minerals used in military applications, solar cells, fiber optic cables and other manufacturing processes. A spokesperson for the White House National Security Council said the United States will take necessary steps to try to prevent further “coercive actions” by China and will continue efforts to diversify supply chains away from the country.

According to its official WeChat account, the Internet Society of China urged domestic companies to carefully consider purchasing US chips and seek to expand cooperation with chip companies in countries and regions other than the United States.

The organization also encouraged domestic companies to “proactively” use chips produced by domestic and foreign companies in China.

US controls on chip exports have caused “substantial damage” to the health and development of China’s internet sector, he added. Companies targeted by the United States said they could continue production due to their efforts to localize production.

The China Association of Communications Enterprises said it no longer views U.S. chip products as reliable or safe and that the Chinese government should investigate the supply chain security of the country’s critical information infrastructure.

The warnings echo China’s treatment of Micron, a US memory chip maker, which was subject to a safety review last year shortly after the US imposed export controls on chip-making technology in China.

China subsequently banned Micron from selling its chips to major domestic industries, impacting a double-digit percentage of its total revenue.

Intel also faced scrutiny. In October, another influential industry group, the China Cybersecurity Association, called for a security review of Intel’s products, saying the U.S. chipmaker had “consistently harmed” the country’s security and national interests.

Source: Terra

Rose

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