China has reacted angrily to the Biden administration's choice to put into effect new limitations on exports of sophisticated chips.
The foreign ministry declared that the limitations go against the ideals of a market economy and evenhandedness.
The measures are aimed at chipmaking equipment as well as sophisticated chips, including two from the number one in the market, Nvidia.
It is thought that this move is aiming to fix the issues revealed when the first set of measures regarding chips were implemented in October.
America declared that the steps were meant to avoid China from accessing modern technologies that can reinforce its military, primarily in the realm of AI.
The Biden administration has rejected the assertion that they were attempting to cause economic pain to China, however, the Chinese foreign ministry characterized the action as a "compulsion to disconnect for political motives".
China's stock markets with chip-related businesses have experienced slight declines since last week's news. The CSI Semiconductor Index dipped by 1.4% on Wednesday, and the STAR Chip Index declined by 1.2%.
A gauge monitoring Chinese AI enterprises finished down by 1.8%.
Shares of US chipmakers have also decreased in value due to the restrictions, which have also impacted American companies Advanced Micro Devices and Intel.
In a filing, Nvidia declared that the revised export regulations will impede the sale of three different chips it created for the Chinese market - the A800, H800, and one of its gaming chips.
Analysts think that Nvidia will be affected the most due to the new curbs, since approximately 25% of their income from data centre chip sales comes from China. This had a considerable impact on their shares, with a decrease of up to 4.7%, a remarkable change for a previously highly regarded stock.
The Semiconductor Industry Association, accounting for 99% of US semiconductor industry revenue, declared in a statement that the new measures are "overly broad" and "could disbenefit the US semiconductor environment without successful national security implementation as it will likely cause overseas customers to resort to other options".
China recently took retaliatory action by limiting exports of gallium and germanium, which are fundamental to the semiconductor sector.
With far and away the biggest presence in the international market, China produces 80% of all of the gallium and 60% of the germanium globally, according to the Critical Raw Materials Alliance (CRMA).
These materials are classified as "minor metals", which are rarely encountered as individual elements in nature, and are often the result of other operations.
Aside from the United States, Japan and the Netherlands - which is the location of essential chip equipment producer ASML - have also implemented export regulations on Chinese chip technology.
The ongoing back-and-forth between the world's two most powerful economies has sparked worries about an increase in what is termed "resource nationalism," which occurs when governments stockpile key resources in order to exert control over other nations.
Comments