China’s top technology overseer convened a series of emergency meetings over the past week with leading semiconductor companies, seeking to assess the damage from the US’ sweeping chip restrictions and pledging support for the critical sector.
The Chinese Ministry of Industry and Information Technology has summoned executives from firms including Yangtze Memory Technologies Co (長江存儲) and supercomputer specialist Dawning Information Industry Co (中科曙光) into closed-door meetings since Washington unveiled measures to contain China’s technological ambitions.
Ministry officials appeared uncertain about the way forward, and at times appeared to have as many questions as answers for the chipmakers, people familiar with the discussions said.
Photo: AP
While officials refrained from hinting about countermeasures, they said that the domestic IT market would provide sufficient demand for affected companies to keep operating, the people said on condition of anonymity.
Many of the participants argued US curbs collectively spell doom for their industry, as well as China’s ambitions to untether its economy from American technology. Yangtze Memory, among China’s best hopes of getting into cutting-edge chipmaking, told the ministry that its future might be in jeopardy, one of the people said.
Artificial intelligence chipmaker Biren Intelligent Technology Co (壁仞科技) is an example of how Chinese semiconductor start-ups went from stardom to crisis in a matter of days. The chip designer was eyeing a US$2.7 billion valuation and said in August it had released the first general-purpose graphics processing unit, “setting a new record in global computing power.”
However, Biren had contracted with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to produce its chips, using advanced 7-nanometer technology.
Now, TSMC might have to stop working with the start-up under US President Joe Biden’s regulations, and no company in China has the capabilities to replace it.
Biren did not comment on the discussions, but said in a statement that the firm is operating normally, and it has determined that the curbs would not affect its business after checking with lawyers.
Dawning Information, China’s leading builder of supercomputers, and its unit Hygon Information Technology Co (海光信息), are scrambling to find alternatives to the US silicon they need to keep going.
It is unclear how Beijing might react to the new restrictions, the Biden administration’s most aggressive yet as it tries to stop China from developing capabilities it perceives as threatening.
Chinese President Xi Jinping (習近平), in a landmark address over the weekend, pledged technology self-reliance to prevail in a battle with the US for technological supremacy — which many took as a sign that Beijing plans to redouble policy and financial support for sectors such as artificial intelligence and chips — but Xi stopped short of directly addressing Washington’s latest moves or outlining new aid.
Officials have not indicated whether they were considering measures to retaliate.
Depending on how broadly Washington enforces the latest restrictions, the effect could extend well beyond semiconductors and into industries that rely on high-end computing, such as electric vehicles, aerospace and smartphones.
Shares of chip sector leaders, from TSMC to Intel Corp, have been sold off in recent days, spooked by growing uncertainty as the world is bracing for a potential recession.
“When Beijing is caught flat-footed, its initial reaction is always slow,” a note from Fathom China said. “Ministers are not authorized to make decisions on their own, they need the big bosses to decide, and right now, the big bosses are busy with the Party Congress,” which began on Sunday.
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