China's Semiconductor Industry Prepares for Trump's Return

By Eduardo Baptista and Fanny Potkin

BEIJING/SINGAPORE (Reuters) – China's semiconductor industry is bracing for a challenging four years under Donald Trump's prospective presidency, strategizing to enhance procurement of foreign chipmaking equipment and seeking to hire overseas talent while forming new alliances.

Strategic Approaches

Several strategies are under consideration by Chinese chip firms, such as:
– Pursuing closer partnerships with countries and companies alienated by U.S. policies.
– Doubling down on efforts towards self-sufficiency.

This response comes after Trump previously targeted companies like Huawei, ZTE, and SMIC during his first term, implementing trade restrictions that limited their access to crucial U.S. technology. In contrast, the Biden administration has maintained broad export controls aimed at restricting access to advanced chips for the entirety of China's tech sector.

Industry Insight

Zhu Jing, deputy secretary-general of the Beijing Semiconductor Industry Association, emphasized the need for Chinese chip companies to expand their international presence. He noted there could be opportunities to resume certain chip imports if U.S., Japan, and European sanctions weaken under Trump.

Zhu also pointed out the potential advantages for China's semiconductor industry regarding talent acquisition and international cooperation if Trump's administration aligns with its previous stance against China.

Self-Reliance and Localisation

Many industry analyses hint at an increase in export controls and tariffs under Trump, reinforcing the importance of self-sufficiency for the industry. According to Jinan Lujing Semiconductor Co, the previous administration’s actions highlighted the need for localised semiconductor production.

Prepared for Challenges

China has significantly increased its imports of semiconductor equipment, amounting to $24.12 billion in the first nine months of the year, which represents a 33% increase. This includes $7.9 billion spent on lithography machines essential for crafting advanced chips, primarily sourced from the Netherlands.

Industry sources reveal that Chinese firms are proactively maximizing their semiconductor equipment orders to shield against electoral uncertainties. Chinese technology companies have, over time, enhanced their production capacities in preparation for potential tariffs and import restrictions that could arise from the next administration.

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