CHINA’S semiconductor industry is readying itself for four more combative years under Donald Trump as US president by ramping up purchases of foreign chipmaking equipment and looking out for opportunities to hire overseas talent and forge new alliances.
Among the strategies being considered are the pursuit of closer ties with countries and firms that may feel alienated by the US President-elect’s future policies, and a doubling down on self-sufficiency, according to a review of more than 30 articles and research notes published by Chinese chip firms, associations and analysts this week after Trump’s win.
Trump notably went after Chinese telecoms conglomerates Huawei and ZTE, as well as chipmaker SMIC, during his first term in office, placing them on trade blacklists that curbed their access to crucial US hardware and software. The Biden administration in contrast has leaned on broad export controls, meant to cut off all of China from access to the most advanced chips made by US firms.
Zhu Jing, deputy secretary-general of the Beijing Semiconductor Industry Association, urged Chinese chip firms on Thursday (Nov 7) to beef up their overseas business and expand to more countries, saying there could be opportunities to resume procurement of certain chip imports should global coordination between the US, Japan and Europe to enforce sanctions against China weaken under Trump.
Companies should also step up to attract overseas talent if the Trump administration repeats the stance of its first term and implements policies that make it difficult for Chinese students and professionals to work in the US, he said in an article published on WeChat.
“After Trump takes office it is possible that there will be some benefits to the development of China’s semiconductor industry in terms of professional talents, multinational companies and foreign cooperation. I recommend that we adapt to the new situation and changes in a timely manner,” he said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Many of the articles also predicted the industry would see a step up in export controls and potential tariffs against it under Trump and that doubling down on self-sufficiency is the way forward.
“Trump’s first term made us realise the importance of semiconductors and the necessity of localisation, paving the way for China’s semiconductor industry to become self reliant,” Jinan Lujing Semiconductor, a maker of security chips and power devices, said on its WeChat account.
The industry had been prepared for its relationship with the US to stay difficult whether Trump or his opponent Kamala Harris won, though some had expected more long-lasting challenges for the sector under Harris.
Better prepared
China has ramped up its purchases of semiconductor equipment from overseas. For the first nine months of this year, China’s imports of semiconductor equipment increased by a third to US$24.12 billion, according to data from China Customs.
Of that, US$7.9 billion was spent on lithography machines, which are needed to make the most advanced chips, up 35.44 per cent year-over-year.
Most of these lithography machines came from the Netherlands, valued at US$7 billion. ASML Holding stopped shipping its most advanced deep ultraviolet lithography (DUV) machines to China this year, and in some cases, older DUV models for certain fabs, following rules rolled out by the Biden administration last year. The company has been unable to ship its extreme ultraviolet lithography (EUV) machines to the country since 2019.
Two industry sources told Reuters that Chinese companies had been maximising semiconductor equipment orders to protect themselves from any election impact. The sources did not wish to be identified due to the sensitivity of the matter.
“Chinese tech companies, having been impacted by tariffs during the first Trump administration, have progressively expanded their production capacities to mitigate future risks,” said Nori Chiou, investment director at Singapore-based White Oak Capital Partners.
“They are more prepared this time and feel more ready than with the 2018 trade war and the 2020 election.” REUTERS
