Meanwhile Intel saw its revenue drop in China amid a record quarterly loss, 18,000 staff cut, and revenue drop in Q3 YoY. China account for 25-30% of Intel market. With the latest ban, Nvidia, Qualcomm can also expect to be impacted in coming years. Their hope pins on the explosive growth of the AI market, whether the growth in coming years will be explosive remain to be seen.

Meanwhile China export of semiconductor continue to grow. Revenue expected to exceed CNY 1 trillion (US$30.8 billion) this year. Stock of Chinese semiconductor sector also rise on the news of US ban.

Many Chinese fabs were built starting around 2021 and enter production around 2022-2023, initially with smaller scale production. Production pace start to pick up and normalize in 2024. Large scale fab investment continues amid expectation of growing US ban. More advanced fabs will enter production starting from 2025. TW has the most semiconductor fab, around 20, follow by S. Korea's 15 fabs. By the end of 2025, China will have close to 50 fabs, most of which are built in the past 3 years.

China market accounted for around half of world semiconductor import. China's semiconductor import dropped around 10% in 2023, 10-15% in 2024, and is expected to drop further in coming years, perhaps at 20% rate. Foreign semiconductor will be replaced by domestic semiconductor.

China declares US chips unsafe, urges companies to use domestic semiconductors

By Benedict Collins | published 4 December 2024

China has hit back with sanctions of its own

• China has shadow-banned US semiconductors
• The sanctions hit back against US export controls for chip manufacturing kit
• China has also restricted exports of rare minerals used in military devices

China has hit back against the latest round of US sanctions by declaring US semiconductors "no longer safe" for use by Chinese organizations.

The US recently issued its third round of sanctions to limit China’s ability to produce semiconductors domestically by restricting companies from selling chip assembly technology to the nation.

China did not offer any evidence or reasoning as to why US semiconductors were unsafe, but it is likely an attempt to steer Chinese markets away from using imported chips from companies such as Nvidia, AMD, and Intel and on to domestic productions.

Chip war continues

China’s warning isn’t a ban on US chips per se, but the Internet Society of China told companies to carefully consider their choice of semiconductor manufacturers, and urged organizations to use China’s growing domestic market of chips “proactively.”

Last year, China added several specific semiconductors produced by Intel, AMD, and other chip manufacturers to a blacklist, forcing companies to shift away from Western technology. Moreover, a group representing China’s cybersecurity professionals claimed that Intel was installing backdoors into CPUs to be used by the NSA for espionage.

Additionally, China has banned the export of gallium, antimony, and germanium to the US due to their use in both military and civilian applications. China accounts for 98% of the world's raw gallium production, 48% of antimony, and 83% of germanium, causing prices to skyrocket and likely forcing the US to seek alternative sources.

As part of the warning against the use of US semiconductors, the China Association of Communication Enterprises has urged Beijing to investigate potential supply chain vulnerabilities in critical infrastructure that use Western-produced semiconductors.