The impact of the US-China chip ban on third parties

Since 2020, both Democratic and Republican US administrations have enforced bans on chip and semiconductor manufacturing equipment to China. As a result, US chip exports to China declined by a significant 22% to 36%. However, these measures did not achieve the intended effect of slowing China's growth as a semiconductor supplier.

In fact, China's market share in the global semiconductor industry grew by 18% between 2017 and 2023, despite the successive trade bans. According to a European Commission study, the United States' chip production policies in China did not succeed in preventing China from acquiring advanced chip technology. Just 11 months after the CHIPS and Science Act sanctions were implemented in 2022, Huawei unveiled a mobile phone featuring the very technology the sanctions were supposed to deter.

Consequently, US companies exported fewer chips and equipment to China, but China ended up producing and importing more chips from other countries. The chart below illustrates that in response to US sanctions, China sourced semiconductors and semiconductor equipment from the EU, Japan, Singapore, South Korea, and Malaysia. While Taiwan experienced a drop in exports to China in line with the US, the growth in exports from other countries was not statistically significant.

The European perspective acknowledges the US government's support for the local semiconductor industry.