China accuses US of intimidation over chip sales

China on Tuesday vowed to take "firm measures" in response to new US government recommendations on the export of advanced electronic semiconductors, known as chips , denouncing an attempt at intimidation by Washington.

“The US measures are typical unilateralism, combining bullying and protectionism, and seriously harm the stability of global supply chains and the semiconductor industry,” a spokesperson for China’s Ministry of Commerce said in a statement. Although the Trump administration last week lifted some restrictions on the export of semiconductors used in the development of artificial intelligence (AI) that particularly penalized China, the US Department of Commerce issued a set of recommendations instead to warn “the public of the potential consequences of allowing US chips to be used” to develop “Chinese AI models.” The US lifted some of the restrictions because they affected countries other than China. But it chose to issue warnings about exports to the Asian giant, which Beijing did not like.

The Commerce Department explained that the option was to share US AI technology “with trusted foreign countries around the world, preventing it from falling into the hands of [US] adversaries”. These guidelines are, however, non-binding, unlike the restrictions proposed by the previous administration of Democrat Joe Biden, which Trump has now revoked. Nevertheless, Beijing strongly condemned the measure, accusing Washington of “abusing export controls to contain and suppress China”. “Any organisation or individual that implements or assists in the implementation of these US measures may be violating” Chinese regulations, the Chinese Commerce Ministry warned.

Biden’s proposed rules, each subject to a different level of restrictions, would have gone into effect on May 15, and divided countries into three categories, with countries considered “tier one,” such as Japan and South Korea, exempt from the restrictions, while those in the second category — such as Mexico and Portugal — were subject to a limit on the volume of chips they could receive. U.S. chipmakers such as Nvidia and AMD had criticized the restrictions.

Nvidia CEO Jensen Huang warned Tuesday that U.S. restrictions on chip exports to China had failed because Chinese companies were developing their own technologies . “Local [Chinese] companies are very, very talented and very determined, and export controls gave them the mindset, the energy and the government support to accelerate their development,” Huang added. “I think overall, export controls have been a failure,” he told reporters at the Computex technology fair in Taiwan’s capital Taipei.