US Chips Are ‘No Longer Safe’ To Buy, Say Chinese Industry Bodies

Chinese companies should be wary of buying US 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. The associations cover some of China's largest industries, including telecommunications, the digital economy, autos, and semiconductors.

Their advice could impact US chipmaking giants like Nvidia , AMD, and Intel that, despite export controls, have managed to keep selling their products in the Chinese market.

The associations did not go into details on why US chips were unsafe or unreliable.

The Internet Society of China urged domestic companies to think carefully before procuring US 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. US chip export controls have caused "substantial harm" to the health and development of China's internet industry, it added.

The 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. The package includes curbs on China-bound shipments of high bandwidth memory (HBM) chips, which are critical for high-end applications like AI training; new curbs on 24 additional chipmaking tools and three software tools; and new export restrictions on chipmaking equipment manufactured in countries including Singapore and Malaysia.

The tool controls will likely hurt Lam Research, KLA and Applied Materials, as well as non-US companies like Dutch equipment maker ASM International.

Among Chinese companies facing new restrictions are nearly two dozen semiconductor companies, two investment companies and over 100 chipmaking tool makers, according to Reuters.

The US also is poised to place additional restrictions on Semiconductor Manufacturing International, China's largest contract chip manufacturer, which was placed on the Entity List in 2020 but with a policy that allowed billions of dollars worth of licenses to ship goods to it to be granted.

Written with inputs from Reuters