BEIJING/SINGAPORE – China’s semiconductor industry is gearing up for a potentially turbulent four years under a second Donald Trump presidency, adopting various strategies to navigate the continued tensions.
According to a review of more than 30 articles and research notes published by Chinese chip firms, associations, and analysts, the industry is preparing for a range of scenarios:
Pursuing Closer Global Ties
- Seeking closer partnerships with countries and companies that may feel alienated by Trump’s policies
- Looking to hire overseas talent and forge new international alliances
Doubling Down on Self-Sufficiency
- Ramping up purchases of foreign chipmaking equipment to build domestic capabilities
- Prioritizing localization and reducing reliance on U.S. technology
Anticipating Intensified Export Controls and Tariffs
- Expecting a further tightening of export restrictions and potential tariffs under a Trump administration
- Viewing self-reliance as the key to weathering the challenges
“After Trump takes office, it is possible that there will be some benefits to the development of China’s semiconductor industry in terms of professional talents, multinational companies and foreign cooperation,” said Zhu Jing, deputy secretary-general of the Beijing Semiconductor Industry Association.
The industry had already been bracing for continued difficulties in U.S.-China relations, regardless of whether Trump or his opponent Kamala Harris won the election. However, many expected the challenges to be more long-lasting under a Harris presidency.
Concrete Steps Taken China has already taken concrete steps to bolster its semiconductor industry:
- Imports of semiconductor equipment surged by a third to $24.12 billion in the first nine months of 2022
- $7.9 billion was spent on advanced lithography machines, up 35.44% year-over-year
- Chinese companies have been maximizing equipment orders to mitigate future risks
“Chinese tech companies, having been impacted by tariffs during the first Trump administration, have progressively expanded their production capacities to mitigate future risks,” said Nori Chiou, investment director at White Oak Capital Partners. “They are more prepared this time and feel more ready than with the 2018 trade war and the 2020 election.”
The semiconductor industry’s preparations highlight the persistent tensions between the U.S. and China, with the potential for the Trump administration to further ratchet up economic and technological pressures. China’s focus on self-reliance and global collaboration may shape the future of the chip sector for years to come.
Source: Reuters