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Investigating the Effect of the U.S. Semiconductor Export Controls on China

Author

Listed:
  • Kim, Hyok Jung

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Oh, Jonghyuk

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Kwon, Hyuk Hu

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

Abstract

This report examines the significant impact of U.S. semiconductor export controls imposed under the Biden administration in October 2022. These controls, which target a broad range of semiconductor manufacturing facilities and AI chips, are part of a strategy aimed at curbing China’s advancement in critical technologies. A notable 32.5% decline in China’s imports of semiconductor manufacturing equipment has been observed, particularly in regions with advanced production capabilities and foreign company operations, such as those involving Samsung Electronics and SK hynix. While Korea experienced substantial drops in exports to China, the Netherlands saw an increase, reflecting its dominance in specific technologies like lithography. The AI chip sector has also been affected, with China turning to downgraded chips due to restricted access to high-performance models from companies like Nvidia. South Korea must adapt by strengthening its upstream semiconductor industry, considering reshoring production, and collaborating with international partners to mitigate risks. As U.S. export controls continue to evolve, the global semiconductor industry may face increased fragmentation, making strategic responses from affected nations essential to maintain competitiveness. Additionally, ongoing monitoring and adaptation to the dynamic regulatory environment shaped by these export controls are crucial.

Suggested Citation

  • Kim, Hyok Jung & Oh, Jonghyuk & Kwon, Hyuk Hu, 2024. "Investigating the Effect of the U.S. Semiconductor Export Controls on China," World Economy Brief 24-28, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwe:2024_028
    as

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