Restrictions on China’s semiconductor sector are tightening, as the US has asked Europe and Asia to further restrict China’s access to advanced chips and chipmaking equipment, according to data analytics firm Everstream Analytics.

The US government has been putting pressure on Germany to impose semiconductor export control measures against China, which the Netherlands and Japan are already doing so. It comes amid fears that escalation of tensions in Taiwan could cause a further semiconductor shortage in the year ahead, as Taiwan accounts for 38.9% of the world’s share of semiconductors, worth $138 billion in export value. 


China has been encouraging its OEMs to procure semiconductors made within the country rather than using foreign chips

The US authorities have also asked the Dutch government for additional restrictions on the services that Netherlands-based semiconductor supplier ASML is allowed to offer Chinese customers. The proposed restrictions could prevent the supplier from servicing and repairing deep ultraviolet lithography equipment that it previously sold to Chinese customers, which is essential for transferring circuit patterns to a printed circuit board.

Outside of Europe, the US has reached out to the Japanese government to limit exports of vital chemicals used in semiconductor manufacturing to China. 

Discussions between the US, South Korea and Japan on chip restrictions are ongoing, with a trilateral meeting scheduled for June to discuss the semiconductor supply chain.

China is responding to the ongoing restrictions by further developing its local chipmakers, with Beijing currently in the process of raising $27 billion for the third phase of its China Integrated Circuit Industry Investment Fund. The Chinese Ministry of Industry and Information Technology has encouraged Chinese OEMs to procure semiconductors made in China over foreign chips.

China’s maritime logistics industry has also come under scrutiny in the US because of potential security vulnerabilities related to Chinese-made cranes at US ports. In March, a congressional investigation by the US concluded that undocumented telecommunications equipment was contained in cranes manufactured by Shanghai Zhenhua Heavy Industries. Chinese-made cranes are currently used at all major US ports aside from Savannah, Brunswick and Jacksonville.

The restrictions on semiconductor trade with China comes as protection against forced labour intensifies. In February, goods valued over $301m were detained by US Customs and Border Protection, amounting to the highest value since the Uyghur Forced Labor Prevention Act (UFLPA) came into effect. Exports from China that were affected totalled $13.46m, and electronics continue to comprise the highest value of confiscated goods. In the same month, GM, Tesla, BYD, Toyota & VW were found to be failing to minimise the risk of Uyghur forced labour being used in aluminium sourcing, in a report by Human Rights Watch.