In 2022, the Biden administration introduced a series of tighter export controls aimed at restricting China’s access to advanced semiconductors and related manufacturing equipment. The official rationale behind these measures was to impede Beijing’s military advancement, in order to deny it the technological edge provided by cutting-edge AI capabilities. U.S. Commerce Secretary Gina Raimondo described these controls as “laser-focused” on preventing China from modernizing its military arsenal, particularly in the areas of nuclear and conventional weapons. While protecting national security was the primary goal, U.S. officials, including National Security Adviser Jake Sullivan, acknowledged that maintaining America’s technological superiority was also a major concern, as this competitive edge directly contributes to national security.
The effectiveness of these controls, however, is coming under scrutiny. While they may temporarily hinder China’s economic and technological growth, experts argue that these measures may inadvertently accelerate the development of China’s indigenous semiconductor industry. As US companies like Nvidia and AMD continue to dominate the AI chip market, Chinese companies like Huawei and Biren are making significant progress in chip design. Despite these advances, China’s semiconductor manufacturing capabilities, especially at the most advanced levels, remain years behind industry leaders. Semiconductor Manufacturing International Corporation (SMIC), China’s top chipmaker, still relies heavily on foreign equipment, particularly from the Netherlands, Japan and the United States.
According to Sullivan, the US strategy is to maintain a technological edge “for as long as possible” in critical areas like AI, which are essential to both economic growth and military modernization. Raimondo echoed this sentiment, stressing that the US leads the world in advanced semiconductor design and that maintaining this edge is vital. Therefore, the export controls are part of a broader strategy to maintain US dominance in these areas.
Despite the narrow focus of these controls, which target only the most advanced chips and manufacturing equipment, the restrictions have wide-reaching implications. Chinese military systems, which primarily use older, well-tested chips, are unlikely to be significantly impacted. However, the restrictions could hinder China’s ability to develop more advanced AI models, which require cutting-edge chips. While some analysts argue that the controls could temporarily impede China’s AI advancement, others believe they will only delay the inevitable.
In fact, there is growing concern that the export controls could stymie China’s efforts to develop a self-sufficient semiconductor industry. The restrictions are creating a new market for domestic Chinese companies, encouraging them to invest more heavily in research and development. This, in turn, could lead to a faster development timeline for advanced domestic semiconductor manufacturing capabilities. As Chinese companies improve their chip-manufacturing equipment and designs, the country could potentially close the gap with leading global manufacturers sooner than anticipated.
Meanwhile, US and allied semiconductor companies are facing financial losses due to being excluded from the Chinese market. This exclusion not only reduces their revenue but also limits the funds available for further research and development, which could weaken their competitive edge. Export controls are also contributing to the deepening geopolitical divide between the US and China, raising tensions and increasing the risk of economic disruption.
In response, Washington has taken steps to boost its own semiconductor industry. For example, the 2022 CHIPS and Science Act allocated $52 billion for semiconductor production and research in the US. This funding is intended to increase domestic capabilities and ensure that the US stays ahead in the race for technological supremacy. However, critics argue that these measures focus too much on incremental improvements rather than revolutionary advancements. To maintain its edge, the US must invest in next-generation technologies such as light-based, neuromorphic, and quantum computing, which promise to revolutionize a variety of industries and scientific fields.
Ultimately, the effectiveness of US chip controls will depend on its ability to innovate and stay ahead of global competitors. While existing strategies may provide temporary advantages, it is clear that the long-term solution lies in promoting unprecedented technological advancements. As the global landscape continues to evolve, the US must adapt its policies not only to counter China’s growing technological capabilities but also to advance its own innovations.
