Why Chinese AI and semiconductors could fall decades behind under US chip ban ‘blitz’

Washington’s latest move to restrict access to chip-making equipment dims Beijing’s hopes of buying from non-US suppliers such as the Netherlands

Without foreign technology, it could take at least 20 years for China to regain lost ground, according to industry consultant

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China is reportedly preparing a US$143 billion package to support its semiconductor industry. Photo: TNS

Published: 6:30pm, 5 Feb 2023Updated: 7:23pm, 5 Feb 2023

As the US pushes to keep China from getting the latest chip-making technology, tightened sanctions could cause Chinese semiconductor and AI development to fall decades behind, according to industry insiders.

The United States secured a deal with the Netherlands and Japan last week to restrict China’s access to certain advanced chip-making equipment, dimming Beijing’s hopes of circumventing previous sanctions by importing non-US technologies.

Like US trade restrictions imposed in October, the most recent export controls aim not only to prevent China from obtaining high-performance chips but also to hold China back in developing the ability to produce them.

“With the agreement between the US, the Netherlands and Japan, the door to non-US equipment, which the entire Chinese chip industry has relied on for survival for the past two years, has been officially shut,” said Leslie Wu, a Taiwanese semiconductor industry consultant and the environmental, social and governance (ESG) VP of Jinhong Gas.

One of the main targets of the measures is China’s artificial intelligence development, which requires powerful computer chips.

For instance, Nvidia A100 and H100 chips, with built-in infrastructure for training artificial intelligence models and algorithms, including computer vision, natural language processing and conversational AI, have been banned from export to the Chinese market since last August.

Just after the October restrictions went into effect, Taiwan Semiconductor Manufacturing Company (TSMC) suspended production of two Chinese-designed AI chips believed to be able to outperform and serve as potential alternatives to the A100.

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