Tariff War, Eventually Expanding Supply Chain... US "Bans Core Technology Exports to China"

The United States has imposed a ban on the export of core industrial technologies to China, including aircraft engines, semiconductors, and related technologies, as well as certain chemicals.

Following the tariff war, the US has expanded its 'technology supply chain separation' by blocking key technologies essential to major industries, taking a step further into the 'technology decoupling war.' In response to China's rare earth export controls, the US has pulled out a countermeasure card of blocking essential technologies for key industries.

The New York Times (NYT) reported on the 28th (local time) that the US Department of Commerce has halted the export of some key components and technologies from American companies to the Commercial Aircraft Corporation of China (COMAC).

■ Order to Stop Transactions with Chinese Companies

The Financial Times (FT) also reported that the US Department of Commerce has ordered software (SW) suppliers used in semiconductor design to stop transactions with Chinese companies. The targets include major 'Electronic Design Automation (EDA)' software companies such as Cadence Design Systems (CDS), Synopsys, and Germany's Siemens EDA. These three companies account for 80% of the Chinese EDA market.

EDA software is essential for next-generation semiconductor design and verification, and this measure is intended to slow down China's advanced semiconductor development. FT also evaluated it as "a more aggressive attempt by the US to contain China's AI semiconductor development, a geopolitical competitor."

The US has been gradually strengthening its control over exports of core technologies such as advanced semiconductor manufacturing equipment and software to China. Previously, the Biden administration also restricted the export of the latest semiconductor design software to China in 2022, and American companies have been selling products within the export control regulations to China.

■ Ban on Core Components for Aircraft Control

COMAC completed the C919, similar in size to the Boeing 737, in 2022, but relies on the US and Europe for key components needed for aircraft control, such as engines and power supply systems. Control technologies and major components needed for existing diesel cars and robots have also been included in the supply suspension items to impact Chinese companies with high dependency.

This US measure comes amid a broad review of strategic material exports to China by the Department of Commerce's Bureau of Industry and Security (BIS). It implies that more fields and items will be subject to export restrictions and supply chain separation measures in the future. The Department of Commerce's BIS is responsible for reviewing export licenses and granting licenses for products with military value or other strategic importance. The NYT noted, "These new restrictions by the US government are pushing the two economic giants, the US and China, into a supply chain war," adding, "Washington and Beijing are trying to showcase their influence over essential economic elements to gain an upper hand in the escalating trade conflict."

The US is continuously expanding its restrictions on sharing advanced technology with China and is also expanding restrictions on US investments in China's big tech (large technology companies).

june@fnnews.com Lee Seok-woo Reporter