China Reaches Out To WTO To Avenge US Chip Embargo

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  • China retaliated against the U.S. chip embargo, filing a dispute with the World Trade Organization and escalating the tech war between the two countries.
  • China’s commerce ministry said its WTO complaint was necessary to defend its “legitimate rights and interests” after the U.S. introduced sanctions in early October to make it harder for China to buy or develop advanced semiconductors, the Financial Times reports.
  • Ben Kostrzewa, an expert on U.S.-China trade relations, said China’s complaint was unlikely to “create any legal effect” unless the suspended Appellate Body resumed its work.
  • Recently U.S. President Joe Biden and his Chinese counterpart Xi Jinping used their first in-person meeting as leaders to signal a mutual desire to improve ties.
  • China’s complaint followed a landmark ruling in which a WTO panel backed Beijing against Washington.
  • The export controls aimed at hampering China’s ability to use high-end U.S. technology for military applications.
  • China enlisted Alibaba Group Holding Limited BABA and Tencent Holding Ltd TCEHY alongside state-backed groups to bolster the country’s semiconductor capabilities.
  • Chinese chipmaking champions like Semiconductor Manufacturing International, Yangtze Memory Technology, and Hua Hong Semiconductor have proliferated in recent years. 
  • However, the companies depended on foreign companies for some core elements of underlying chip design and the equipment to make them.
  • Lam Research Corp LRCX, the California-based supplier of chipmaking equipment, began cutting staff in China.
  • The U.S. negotiated with Japan and the Netherlands to bar their companies from selling chipmaking tools for advanced Chinese semiconductors.
  • Photo by Body Stock and Dragon Claws via Shutterstock
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