China to Benefit from U.S. Semiconductor Export Controls: Kiplinger Economic Forecasts

China is a world superpower, so the fortunes of the Chinese economy have a big impact across the world, and of course in the U.S. too. 

Our hugely experienced Kiplinger Letter team will update you on all the important developments in China and what impact that has at home and for investors (Get a free issue of The Kiplinger Letter or subscribe). Here’s the latest forecast, starting with background on semiconductor exports…

The U.S. is preparing to unveil new semiconductor export controls that would double the number of machines requiring export licenses.

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U.S. producers of chipmaking gear, such as Applied Materials (AMAT), are bracing for impact. Notably, Washington will be working with the Netherlands and Japan, whose governments have agreed to bar sales of the same chipmaking equipment as the U.S. 

While American firms account for 40% of the global market for semiconductor manufacturing equipment, both the Netherlands and Japan are significant players. The Dutch firm ASML (ASML), for example, is the only supplier of extreme ultraviolet lithography machines, used to make the most advanced chips.

But U.S. officials have struggled to get other countries to strike deals, most notably South Korea, a leader in semiconductor manufacturing with a small but sophisticated industry for chipmaking gear, and Germany, the leading supplier of the components used in the production of semiconductor manufacturing equipment.

Why China stands to benefit

One consequence of semiconductor-related U.S. export controls is on China, as Beijing will likely dominate the global industry for less advanced chip tech, according to U.S. intelligence officials.

Moves to cut China off from advanced chips and chipmaking gear have fueled its efforts at the lower end of the tech spectrum. China currently leads the world in building new chipmaking facilities and is expected to account for 18% of global fabrication facilities by 2025, an increase of 7% from 2019, with most facilities dedicated to mature technologies.

Read more

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