China raises ‘serious concerns’ over US restrictions on chip-making machines, supply chain investigation

China raised “serious concerns” over US restrictions on chip-making lithography machines, as well as Washington’s investigation into American semiconductor supply chains, during a phone call between commerce minister Wang Wentao and his US counterpart on Thursday.

But the two countries remain at odds over a range of different issues, including China’s access to advanced technologies, the South China Sea and other security issues.

Wang told US Commerce Secretary Gina Raimondo during the call that the meeting between Xi and Biden in California at the end of last year had set a “clear direction” for the development of economic and trade relations, according to a statement from China’s Ministry of Commerce.

How China is adapting to the US ‘reshoring’ its manufacturing and supply chains

Wang added that both sides should “play an active role in communication and exchange mechanisms” to “create good conditions for enterprise cooperation”.

Wang focused on expressing “serious concerns” over US sanctions that “suppress” Chinese companies, particularly the restrictions on third-party exports of lithography machines.

China is also concerned with the investigation by the US Department of Commerce into US companies’ procurement of legacy semiconductors, which are not cutting-edge but are still key to industries, Wang said.

During the call, the two sides conducted “in-depth and pragmatic communication on economic and trade issues of mutual concern” and discussed “national security boundary issues in the economic and trade areas”, the Chinese statement added.

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The US Department of Commerce had not released its readout on the phone call.

Earlier this month, Dutch company ASML, which makes lithography systems that are critical to the production of the most advanced semiconductors, was barred by its government from exporting some of its equipment to China.
The cancellation of the shipping licence came after the US government tightened export controls on exporting advanced semiconductors and chip-making tools to China in October.

In December, the US Department of Commerce launched a survey to identify how US companies were sourcing so-called legacy chips.

The chips are involved in the production of most cars, aircraft, home appliances, consumer electronics, factory automation systems, military systems and medical devices.

Amid the improving relations, there have also been a series of meetings and exchanges between senior commerce and finance officials from the two countries, including the establishment of working groups that focus on economics, investment and finance.

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