American Affairs Journal

The Evolution of China’s Semiconductor Industry under U.S. Export Controls - American Affairs Journal 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 

 
 
 

 
 
 
 
 
 

 
 
 

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 S ince I last wrote about China’s responses to U.S. export controls in these pages , in February 2024, much has changed, both in terms of U.S. export control measures and the situation on the ground in China. The relative strength of China’s domestic semiconductor industry has also received substantially more media attention. Teardowns of advanced semiconductors produced by domestic foundry leader SMIC purport that China is only three years behind global foundry leader TSMC, though these types of predictions can be misleading.

 In fact, gaining a detailed understanding of what is happening in China’s semiconductor industry is becoming increasingly difficult. 1 In May, the Chinese Semiconductor Industry Association (CSIA) issued an ominous warning to industry insiders to avoid disclosing technical information to media and outside consultants. 2 The pattern for the semiconductor manufacturing industry in China is following a trajectory similar to that of the high performance computer (HPC) sector. Justified by the concern that HPCs could be used for military applications, U.S. export controls were imposed in 2015 and have essentially forced China’s supercomputing sector to stop publicly revealing new systems and technological progress. 3 

 Complicating the semiconductor industry situation in China is the close association of U.S. controls across the sector with the development of artificial intelligence. So far, companies developing advanced generative AI in China have not had to conceal news about their model development because they are operate in the consumer and enterprise space. 4 Continued U.S. pressure on the Chinese semiconductor industry will eventually force these developers into hiding and make it more difficult to assess progress across the AI stack in China and limit U.S. visibility into an area of national security concern.

 Understanding where Chinese companies currently stand in terms of development—from tech conglomerate Huawei, to toolmakers, to smaller players innovating in the development of process gases and materials for advanced semiconductor manufacturing—is also becoming more difficult, as the topic is now politically sensitive. The latest round of U.S. export controls has added yet another dimension to the issue: scores of Chinese companies, including fabs, toolmakers, and smaller companies up and down the supply chain, are now caught up in the broader U.S.-China competition over technology in general and semiconductors in particular. The United States has also added critical components such as high bandwidth memory (HBM) to its controls. The expansion of controls reinforces what National Security Advisor Jake Sullivan calls th

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