Chinese associations warn companies to avoid US chips and invest in local suppliers

In a coordinated move, four of China’s main industry associations issued a warning recommending that companies in the country avoid buying chips made in the United States, claiming that these products are “no longer safe”, informa a Reuters. The guidance comes amid worsening trade and technological tensions between the world’s two largest economies.

This is not the first time that China has made this move. A few months ago, information emerged that Beijing has actively discouraged local companies from purchasing H20 chips, supplied by NVIDIA. These chips from the North American giant are part of the list of options well accepted by the corporate market for the development and execution of AI models.

The associations’ warning follows the latest action by the US government, which on Monday announced new restrictions on technology exports to China, affecting 140 companies, including the semiconductor equipment manufacturer Naura Technology Group. This is the third round of restrictions targeting the Chinese chip industry in the past three years.

Impact on US semiconductor giants

The restrictions could have significant implications for giants like NVIDIA, AMD and Intel, which, even under export control rules, still maintain market share in China. The companies did not comment on the warning issued by the Chinese associations.

I and Semiconductor Industry Association (SIA)an entity that represents large US chip manufacturers, classified the statements as harmful and defended that their products remain safe and reliable:

“We believe that export controls must be targeted and specific to meet national security objectives. We urge both governments to avoid further escalation.”

Chinese response and domestic impact

In addition to the warning, Beijing also announced restrictions on the export of rare minerals crucial for military applications, solar cells, fiber optic cables and other industrial processes. These measures are seen as a strategic response to US actions, demonstrating a more assertive stance by the Chinese government.

The Internet Society of China, one of the associations involved, encouraged companies to seek cooperation with chip suppliers from other countries and to preferably use semiconductors manufactured in China. The China Association of Communication Enterprises reinforced that North American products are no longer reliable and called for an investigation into the security of the country’s supply chain.

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According to Tom Nunlist, associate director of consultancy Trivium China, the impact of these recommendations will depend on the market:

“The guidelines can be interpreted as mild suggestions. Companies can take it into account, but their actions will be dictated by market conditions.”