China has responded to the Biden administration's imposition of fresh restrictions on advanced chip exports, stating that the measures "violate the principles of the market economy and fair
competition." These restrictions target chipmaking tools and advanced chips, including those from market leader Nvidia, and are aimed at closing loopholes that emerged after an initial wave of chip controls in October last year.
The US has clarified that these measures aim to prevent China from acquiring cutting-edge technologies, particularly in artificial intelligence (AI), which could enhance its military capabilities. While the Biden administration denies economic harm as an intention, China has characterized the move as "forced de-coupling for political purposes."
As a result of these restrictions, Chinese stock markets featuring chip-related companies experienced slight declines. The CSI Semiconductor Index dropped 1.4%, and the STAR Chip Index lost 1.2%. An index tracking China's AI companies also closed 1.8% lower.
US chip stocks, including firms like Advanced Micro Devices and Intel, also fell. Nvidia, particularly, expressed concern about the export restrictions impacting its sales of high-end AI chips in the Chinese market. Nvidia's shares, considered star stocks, fell by as much as 4.7% following the announcement.
The Semiconductor Industry Association, representing 99% of the US semiconductor industry by revenue, criticized the measures, calling them "overly broad" and suggesting they could harm the US semiconductor ecosystem without enhancing national security.
China had previously responded to chip export restrictions by imposing its own restrictions on materials vital to the semiconductor industry, such as gallium and germanium. This ongoing trade tension between the US and China is raising concerns about resource nationalism, with countries hoarding critical materials to exert influence over others. Photo by Bulgy Christel, Wikimedia commons.