Balancing the ledger: export controls on U.S. chip technology to China

Abstract

An initial assessment of recent attempts by the United States to limit or delay China’s ability to acquire and produce advanced semiconductor technologies reveals a mixed picture in a complex and rapidly evolving industry. On the one hand, new chip restrictions have significantly affected China’s semiconductor ecosystem, limiting access to equipment essential for next-generation production. On the other hand, China is intensifying its domestic investments in more advanced chips while also reducing market shares of U.S. firms—and by extension, the revenues U.S. firms need to invest in the next-generation of technology. Over time, this loss of market share could well undermine the competitiveness of U.S. firms in this key industry. The initial volley of restrictions has also revealed limitations of export controls, both because the technology is rapidly changing and because there are gaps in compliance between U.S. companies and those of allies.