Washington won't chip away at China's military with semiconductor sanctions

Authors: Gary Clyde Hufbauer and Megan Hogan, PIIE. In October 2022, the Biden administration introduced export controls on China, prohibiting the sale of cutting-edge semiconductor chips, the advanced equipment needed to manufacture them and semiconductor expertise from the United States. The controls are the Biden administration's most serious attempt to undermine China's military modernisation and the most damaging measures US President Joe Biden has taken against China. Chipmakers like the Semiconductor Manufacturing International Corporation - China's largest logic chip producer - will lose access to machine maintenance and equipment replacement under the new controls. According to a 2022 RAND Corporation report, China's military systems rely on older, less sophisticated chips made in China on which US export controls will have no affect. Many semiconductor industry experts agree that China has the technical capability to produce cutting-edge chips yet lacks the commercial capability to scale up production. Nor will US semiconductor firms emerge from the sanctions unscathed, given many have China as their largest market. Instead of overt retaliation, China will probably seek alternatives to US chip technology.