Beijing Rushes to Stockpile Advanced Equipment Before New Export Controls

China has spent record amounts on stockpiling delicate electronic chip equipment as Beijing races to bolster its industry to overcome American sanctions, according to the Telegraph newspaper.

Analysts from Barclays bank stated that official data shows that China imported $10.6 billion (£8.3 billion) worth of semiconductor equipment in the last three months of the previous year.

This comes at a time when the United States and other countries have banned the sale of powerful microchips to China, out of fear of their use in sensitive areas such as the military, artificial intelligence, and cybersecurity.

The Chinese state invests heavily in the development of its domestic industry in an attempt to overcome the sanctions imposed by US President Joe Biden. They celebrated a significant achievement last year when Huawei, a company, developed a phone made largely with Chinese components.

Alicia Cairns, the elected chair of the Foreign Affairs Committee in Britain, stated that China is aiming to strengthen its local industry to undermine Taiwan.

The party will use its position to strengthen its geopolitical influence and undermine our national security by breaking the silicon shield in Taiwan and achieving self-sufficiency in semiconductors. The chips may seem insignificant or small, but they power our economies and the technologies used in our daily lives.

Kearns stated that China’s purchase of semiconductors worth $31 billion, despite export restrictions imposed by the United Kingdom, the United States, and our allies, is concerning and shows that we must tighten our restrictions and close all loopholes.

Barclays stated that China is rushing to purchase equipment before a new wave of sanctions in early 2024.

The analysts added, “We attribute this to Chinese players who are trying to purchase as much advanced equipment as possible before the implementation of updated export controls.”

It is believed that the purchasing operations include advanced equipment from ASML, the Dutch technology giant, which manufactures the necessary state-of-the-art printing machines for producing the most complex chips.

The imports of these machines to China increased by more than four times by the end of 2023, reaching a record high of 2.7 billion dollars.

The total value of Britain’s exports of semiconductor manufacturing equipment to China reached around $314.6 million last year, despite the government’s ban on dozens of export licenses.

The United Kingdom is considered a relatively small player in the export of semiconductor manufacturing equipment, but it still sells abroad through companies like “SPTS and Oxford Instruments,” which manufacture semiconductor chip processing machinery.

Data from the Ministry of Commerce shows that 27 license requests for exporting semiconductor manufacturing equipment to China were rejected in the first six months of last year. Only six licenses were issued and one license was revoked. These figures sharply contrast with the previous year, when 11 licenses were issued and only two were rejected.

The United States prohibited the sale of advanced chips, such as those manufactured by “Nvidia” for artificial intelligence applications, to China.

This country has been pushed to invest billions in its local industry, despite it still being considered years behind the more advanced chip-making facilities, primarily located in Taiwan.