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By Micah McCartney
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What's New
China has significantly increased its semiconductor imports this year as it braces for an escalation in its tech war with the U.S, potentially brought on by the changing of the guard in Washington.
Customs authorities reported that China imported 501.47 billion integrated circuits, essential components for electronic devices, in the first 11 months of the year. This represents a 14.8 percent rise compared to the same period last year.
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The total value of these imports reached nearly $340 billion, marking a 10.5 percent year-on-year increase.
Newsweek reached out to Trump's team by email with requests for comment.
Why It Matters
The stockpiling of chips comes amid heightened concerns over the introduction of greater protectionism under President-elect Trump, who has pledged to raise tariffs on Chinese goods across the spectrum.
The Biden administration has already expanded semiconductor export controls to curb China's progress in strategic technologies like high-tech weaponry and artificial intelligence, citing national security concerns.
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These measures have included pressuring allied industry leaders, such as Dutch semiconductor equipment maker ASML, to restrict sales of advanced chipmaking machines to China.
What To Know
Earlier this month, the U.S. Department of Commerce's Bureau of Industry and Security extended export controls on software tools for producing semiconductors and high-bandwidth memory (HBM) chips "to further impair the People's Republic of China's capability to produce advanced-node semiconductors that can be used in the next generation of advanced weapon systems and in artificial intelligence and advanced computing."
China has accused the U.S. of weaponizing trade and destabilizing supply chains, vowing to defend its industries. In retaliation, China announced a ban on key materials such as antimony, germanium, and gallium—essential to sectors including defense, space, green energy, and manufacturing—highlighting its leverage in global high-tech inputs.
What People Are Saying
Fred Neumann, HSBC's Chief Asia Economist told Reuters**:** "We have to look at this as the opening bid in what will likely turn into a negotiation with the U.S, rather than a unilateral escalation of tariffs," he told Reuters.
Semiconductor professional and SemiWiki.com founder Daniel Nenni told Newsweek: "China has been investing hundreds of billions of dollars in an effort to become semiconductor independent, and they are well on their way to accomplishing that goal. I do not feel that China will ever lead the semiconductor industry, but they will be a fast enough follower to succeed.
"China still consumes the majority of semiconductors produced world wide but will soon be satisfied by internal design and manufacturing, changing the economic landscape of semiconductors forever. This is a big loss for semiconductor companies in the United States and allied countries."
China's Foreign Ministry: The ministry has criticized the U.S. for misusing national security and deliberately "obstruct[ing] economic and trade exchange for political agenda[s]."
What's Next
In another twist in the ongoing trade tiff, China's Ministry of Commerce recently announced an antitrust investigation into U.S. chipmaker Nvidia, citing suspected violations of antimonopoly laws.
On January 2, new U.S. Treasury Department regulations will further restrict investments in sensitive sectors like artificial intelligence, an area where China is rapidly narrowing the gap with the U.S.
Critics argue that overregulation could disadvantage American firms in the global market.
Newsweek reached out to the U.S. Treasury by email with requests for comment.
Update 12/21/24, 6:36 a.m. ET: This article has been updated with a comment from Daniel Nenni.
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