Chip sector further damaged by latest US restrictions

A new raft of US export restrictions aimed at hobbling the Chinese tech sector seem likely to make things more difficult for everyone.

When the measures were announced, it was revealed they are primarily targeted at the semiconductor manufacturing equipment sector, which is dominated by US companies. While a number of seemingly similar restrictions have been imposed by the US in recent years, this latest raft has been widely viewed as a significant further escalation of the US assault on China’s tech sector.

One of the most prominent companies in the chip kit industry is Applied Materials. Reuters reports that the company estimates the new restrictions will cost it between a quarter and half a billion dollars in lost sales for at least the next couple of quarters. Meanwhile Light Reading offers a broader look at US companies affected, noting sales of US chip sector companies to China topped $100 million in 2021.

The world’s biggest contract chip maker is neither American, nor Chinese, by Taiwan’s TSMC. The chip drought of the past couple of years, and the consequent increase in prices, enabled TSMC to almost double its profits in the most recent quarter. But even that was overshadowed by its cautious outlook, which included a reduction in its annual investment budget in anticipation of weakness in the chip sector.

It seems no cost is too high in the US government’s bid to use trade policy for geopolitical and military ends. While the latest measures seem to be aimed at the most cutting edge chips, the collateral damage is already being felt in the memory chip space, according to a WSJ report. With everything else going on in the world right now, destructive state interventions such as this are especially unwelcome but increasingly inevitable.

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