Caution Advised on U.S. Chip Purchases

Four major Chinese industry associations have urged local companies to be cautious about purchasing chips from the United States, suggesting they are "no longer safe" and encouraging local sourcing.

This guidance, issued on Tuesday, encompasses associations from crucial sectors including telecommunications, digital economy, automotive, and semiconductors.

The warning may impact significant U.S. chip manufacturers such as Nvidia (NASDAQ: NVDA), Advanced Micro Devices (NASDAQ: AMD), and Intel (NASDAQ: INTC), which have maintained operations in China despite existing export controls.

The associations did not specify reasons for labeling U.S. chips as unsafe or unreliable. However, the Internet Society of China has publicly advised domestic companies to thoroughly consider their decisions before procuring U.S. chips via their official WeChat account.

Additionally, the Internet Society of China recommended that local firms expand cooperation with chip manufacturers from regions outside the United States and urged companies to use chips from both Chinese and foreign-owned enterprises operating within China.

The U.S. chip export controls have been cited as causing significant harm to China’s internet sector.

This development follows the United States imposing export restrictions on 140 Chinese entities, including chip equipment maker Naura Technology Group, marking the third crackdown in three years.

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