Chinese leader Xi Jinping has long made clear his vision that semiconductors will help the regime overtake the United States as a global technological superpower. Xi’s ambition, however—for China to produce 70 percent of its microchips at home by 2025—is now a distant dream.
Standing in the way of Beijing’s ambitions is a set of sweeping U.S. export controls enacted in October 2022 that aim to hamstring the regime’s power to buy high-end chips or make those of their own.
In January, Yangtze Memory Technologies (YMTC), China’s largest memory chip maker and the parent company of XMC, was said to be cutting as many as 10 percent of its 6,000-strong workforce across all departments.
By market research firm Yole Group’s estimates, YMTC was on track to double its global flash memory chip market share by 2027 to 10 percent before the export controls kicked in and squashed that prospect.
As one of about two dozen Chinese artificial intelligence chip producers blacklisted in December 2022, YMTC isn’t the only Chinese tech firm reeling: In the past four months, at least two phone chip-making initiatives have unraveled, including one under Oppo, a Chinese phone brand that ranks fourth in the world in sales.
Companies once heralded as stars have been downsizing and cutting bonuses to stay afloat. The nation’s chip imports plunged 17 percent by volume in the first seven months of the year. [The domestic tech struggles have led the regime to restart a state fund, which last year became entangled in an anti-corruption probe, to pump about $1.9 billion into YMTC in late February.]
The race for technological supremacy that has become a hallmark of U.S.–China tension is increasingly allowing the United States to go on the offensive. Together with sanctions and tariffs, the U.S. measures are inflicting pain on Beijing in ways that may have seemed out of reach just years ago.
“It’s grinding China down,” Antonio Graceffo, an economic analyst on China and an Epoch Times contributor, said in an interview. “All of this is just absolutely battering the Chinese economy.”
By Eva Fu
