Chinese industry groups urge ditching US chips, claiming they are ‘no longer safe’

Four major Chinese industry associations have advised local companies to avoid purchasing US chips, citing them as ‘no longer safe,’ and to opt for domestic or non-US alternatives instead.
New US rules target China's semiconductor industry, tightening export regulations.

Trade tensions between the USA and China are escalating in the semiconductor sector, as four of the top Chinese industry associations warned against purchasing US chips, claiming they are ‘no longer safe’ and they threaten national security principles. The response follows the latest US crackdown, restricting exports to 140 Chinese companies, including prominent chip equipment makers like Naura Technology Group.

The industry bodies’ warnings suggest that Chinese companies should turn to local suppliers, which could impact US giants such as Nvidia, AMD, and Intel, who have sold in China despite export restrictions.

However, the US semiconductor trade group dismissed these concerns, arguing that US chips remain safe and reliable. It called for more targeted export controls aimed at national security rather than broad, punitive measures.

Despite these assurances, the Chinese associations, which represent major industries from telecommunications to the digital economy, opted for a considerable change of course in the mindset of Chinese businesses. They are now advised to consider non-US suppliers to safeguard their operations and reduce reliance on US technology.

China has also imposed restrictions, notably a ban on exports of critical rare minerals used in military applications, solar cells, and fibre optic cables. The measure is seen as Beijing’s attempt to exert leverage and retaliate against the US actions, showing a more aggressive stance in this tech export war. Experts suggest that while the warnings from Chinese associations may be largely advisory, the new mineral export bans are a far more significant measure that could have a lasting impact on the global supply chain.

The recent crackdown and the retaliatory moves have also raised alarms in Washington, with the US National Security Council vowing to take necessary steps to deter further ‘coercive actions’ from China. The US is also working on diversifying its supply chains away from China, particularly in the semiconductor sector, where China’s growing self-reliance is seen as a challenge to American dominance.