China rebukes U.S. over latest chip restrictions

China loged strong rebuke of the U.S. over its latest chip curbs that will halt shipment of advanced AI chips designed by Nvidia and others

Updated - October 18, 2023 06:55 pm IST

Published - October 18, 2023 05:12 pm IST - SHANGHAI

China has lodged a stern rebuke of the United States over its latest chip curbs.

China has lodged a stern rebuke of the United States over its latest chip curbs. | Photo Credit: Reuters

China has lodged a stern rebuke of the United States over its latest chip curbs, China's foreign ministry said on Wednesday, after the Biden administration published new measures to further restrict Beijing's access to cutting-edge technologies.

"Such restrictions and forced de-coupling for political purposes violate the principles of the market economy and fair competition," the ministry said in a response to Reuters' questions.

The U.S. has said it does not want to block China's economic development, and China hopes the U.S. will adhere to this rather than saying one thing and doing another, it said.

Washington on Tuesday said it plans to halt shipments to China of more advanced artificial intelligence chips designed by Nvidia and others.

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It also restricted a broader swathe of advanced chips and chipmaking tools to a greater number of countries including Iran and Russia, and blacklisted Chinese chip designers Moore Threads and Biren.

China's CSI Semiconductor Index dropped 1.4% on Wednesday following the announcement, while the STAR Chip Index lost 1.2%.

An index tracking China's artificial intelligence (AI) companies closed 1.8% lower, after hitting a nine-month low.

AI stocks were further hit after the U.S. announced further controls on Nvidia chip exports to China, UBS wrote in a note to clients.

Yang Wang, a senior analyst at Counterpoint, said he expected only limited disruption to the Chinese AI industry given that many had been bracing for the curbs and stockpiling chips. Still, the impact could be more material over the medium to longer term and could cause the gap between China and global peers in AI to grow in coming years, he added.

Charlie Chai, analyst at 86Research, said the restrictions would likely further boost the self-sufficiency agenda being pushed by Chinese President Xi Jinping.

While Nvidia will be unable to sell some AI chips to China, the new rules will also prevent cutting-edge technology from being used to manufacture chips designed by two of its most capable rivals, Biren and Moore Threads, well-funded Chinese startups founded by Nvidia veterans.

Biren said on Tuesday that it was assessing the possible impact on the company and would appeal to the U.S. government to re-examine the decision. Moore Threads said it was communicating with all parties involved and evaluating the impact.

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