Falling share prices . . .
The share prices fell for Chinese and Taiwanese semiconductor firms on Monday in response to a U.S. export control announcement, which took effect on Friday. The controls bar U.S. companies from shipping advanced chip equipment and electronic parts that could be used to make chips to China without a licence. Several China- and Taiwan-based semiconductor companies, including Taiwan Semiconductor Manufacturing Co. (TSMC), Naura Technology Group, and Advanced Micro-Fabrication Equipment, experienced a fall in their share prices of up to 20 per cent as investors off-loaded shares in the face of projected supply chain disruptions.
Disrupting trade and labour relations . . .
U.S. export restrictions will not only impact the supply of chips and equipment to China but will also restrict the ability of U.S. nationals to work for Chinese semiconductor firms. In both cases, firms and individuals will have to obtain licences to export chips/equipment to China or work for a Chinese company. The labour restrictions mark the first instance of U.S. regulations focused on employees working for Chinese technology firms, especially Chinese Americans participating in China's "Thousand Talents Plans" designed to bring overseas talent to China. The new rules also put pressure on other countries, such as Taiwan and South Korea, whose companies are selling chips to Chinese consumers.
Rerouting supply chains . . .
The technology rivalry between the U.S. and China, manifested in the new export controls, distorts and disrupts semiconductor supply chains. The disruptions will likely impact other technology companies, such as Apple and Tesla, which rely on semiconductors for their operations. The U.S.-led effort to decouple its semiconductor industry from China may also lead to the regionalization of supply chains, with U.S. companies withdrawing from China and expanding their operations domestically through the CHIPS and Science Act and internationally through partnerships with allied countries, such as those participating in the "Chip 4" alliance comprising South Korea, Japan, and Taiwan. Similarly, Chinese companies will likely expand their presence in Asia, especially in countries that are not allied with the U.S.