US chips are 'no longer safe,' Chinese industry bodies say in latest trade salvo
Chinese industry groups issue coordinated statement on US chips
Chipmakers affected could include Intel, Nvidia, AMD
China also bans exports of rare minerals to the US
Updating Dec. 3 story with Dec. 4 comment from analyst in paragraphs 10-12
By Eduardo Baptista and Brenda Goh
BEIJING, Dec 3 (Reuters) -Chinese companies should be wary of buying U.S. chips as they are "no longer safe" and buy locally instead, four of the country's top industry associations said on Tuesday in a rare coordinated response to Washington's curbs on Chinese chipmakers.
The two nations have targeted each other's economies in the last few days, escalating tensions even before U.S. President-elect Donald Trump returns to the White House in January. Trump has promised to impose heavy tariffs on imported Chinese goods, reviving a trade war from his first four-year term as president.
The industry association warnings came after the United States on Monday launched its third crackdown in three years on China's semiconductor industry, curbing exports to 140 companies, including chip equipment maker Naura Technology Group 002371.SZ.
Their advice could affect U.S. chipmaking giants such as Nvidia NVDA.O, AMD AMD.O, and Intel INTC.O which, despite export controls, have managed to keep selling products in the Chinese market. The three companies did not immediately respond to a Reuters request for comment.
The Semiconductor Industry Association, a U.S. trade association representing major chipmakers, said, "Coordinated calls in China to limit procurement of U.S. chips are unhelpful, and any claims that American chips are 'no longer safe or reliable' are simply inaccurate."
The group reiterated its belief that "export controls should be narrow and targeted to meet specific national security objectives ... We encourage both governments to avoid further escalation."
The associations cover some of China's largest industries, including telecommunications, the digital economy, autos, and semiconductors and combined count 6,400 companies as members.
The statements, released shortly after each other, did not detail why U.S. chips were unsafe or unreliable.
Beijing on Tuesday also banned exports of rare minerals used in military applications, solar cells, fibre optic cables and other manufacturing processes. A White House National Security Council spokesperson said the U.S. would take necessary steps to try to deter other "coercive actions" from China and continue efforts to diversify supply chains away from that nation.
Tom Nunlist, associate director at policy research consultancy Trivium China, said the warnings from the associations could be perceived as soft advice. Companies may listen to it, but whether they take action would be dictated by the market.
The export ban on critical minerals was much more crucial, he added.
"China had been moving quite slowly or carefully in terms of retaliating against moves by the United States, but it seems pretty clear that now the gloves are off."
The Internet Society of China urged domestic companies to think carefully before procuring U.S. chips and seek to expand cooperation with chip firms from countries and regions other than the United States, according to its official WeChat account.
It also encouraged domestic firms to "proactively" use chips produced by both domestic and foreign-owned enterprises in China.
U.S. chip export controls have caused "substantial harm" to the health and development of China's internet industry, it added. Companies targeted by the United States said they would be able to continue production due to their efforts to localiseoutput.
The China Association of Communication Enterprises said it no longer saw U.S. chip products as reliable or safe and the Chinese government should investigate how secure the supply chain of the country's critical information infrastructure was.
The warnings echo China's treatment of U.S. memory chipmaker Micron MU.O, which became the subject of a cybersecurity review last year shortly after the U.S. imposed export controls on chipmaking technology to China.
China later barred Micron from selling its chips to key domestic industries, impacting a low-double-digit percentage of its total revenue.
Intel has also faced scrutiny. In October, another influential industry group, the Cybersecurity Association of China, called for a security review of Intel products, saying the U.S. chipmaker had "constantly harmed" the country's national security and interests.
Chinese chip firms say they can withstand new US export curbs nL3N3N409X
EXPLAINER-After China's mineral export ban, how else could it respond to U.S. chip curbs? nL2N3N407L
Reporting by Eduardo Baptista, Ella Cao, Qiaoyi Li, Liam Mo and Ryan Woo; additional reporting by David Shepardson and Trevor Hunnicutt in Washington; Editing by Christina Fincher, Jonathan Oatis and Jacqueline Wong
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
