Chinese industry associations have issued a rare joint warning to domestic companies, advising against buying U.S. chips due to claims they are “no longer safe.” Instead, the associations urged firms to prioritize domestic and non-U.S. suppliers. This comes amid escalating U.S.-China tensions, marked by Washington’s latest crackdown on China’s semiconductor sector and Beijing’s retaliatory export bans on rare minerals crucial for military and industrial applications.

  1. Warnings from Chinese Associations:
    • Associations representing sectors like semiconductors, telecoms, and autos encouraged companies to:
      • Avoid U.S. chips, citing unreliability.
      • Collaborate with non-U.S. suppliers and use domestically produced chips.
  2. Impact on U.S. Chipmakers:
    • U.S. firms like Nvidia, AMD, and Intel, which have sustained sales in China despite export controls, could face reduced demand.
    • The U.S. Semiconductor Industry Association dismissed claims about the safety of its products, calling for de-escalation and targeted export controls.
  3. Escalating Trade Tensions:
    • The U.S. recently blacklisted 140 Chinese companies, including Naura Technology Group, in its third crackdown on China’s chip sector.
    • Beijing retaliated by banning exports of critical minerals like those used in semiconductors and solar panels.
  4. Historical Context and Retaliation:
    • Similar moves targeted U.S. chipmaker Micron, which lost access to key Chinese markets due to cybersecurity concerns.
    • Intel has also faced security reviews in China, reflecting heightened scrutiny of U.S. tech firms.
  5. Expert Insights:
    • Chinese firms are likely to weigh market conditions over policy advice when deciding on chip procurement.
    • The export ban on rare minerals could have a broader impact than calls to avoid U.S. chips, signaling a shift in Beijing’s approach to retaliation.

The situation underscores growing economic and technological decoupling between the U.S. and China, with both sides intensifying efforts to localize supply chains and secure critical technologies.