As the United States strengthens its export controls, China is reported to be stockpiling not only advanced equipment but also semiconductors. /Courtesy of Yonhap News Agency

As export controls from the United States on China have tightened, it has been identified that Chinese corporations are hoarding advanced semiconductor equipment as well as semiconductors. While the Biden administration continues to put forth export regulation proposals against China until the end of its term, there are predictions that such controls will intensify even after the inception of the second Trump administration.

According to the Chinese General Administration of Customs and others on the 13th (local time), last year, China's semiconductor imports reached $38.5 billion (about 56 trillion won), a 10.4% increase from the previous year. The Hong Kong South China Morning Post (SCMP) reported that, “with broader and stricter trade sanctions from the United States set to be implemented, anxiety over the intensifying technology competition between the U.S. and China is manifesting.”

The Biden administration is tightening restrictions to hinder the growth of China's semiconductor industry by introducing additional export regulation proposals before the end of its term. Just on the 12th, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) and the White House announced additional regulations stating that prior approval from the U.S. government is required for the export, re-export, and transfer of U.S.-origin artificial intelligence (AI) semiconductors and advanced AI models.

It is expected that controls on China will be further strengthened in the upcoming second Trump administration. President-elect Trump had declared throughout the election campaign his intention to impose a 60% tariff on both semiconductors and products from China. Jake Sullivan, the White House National Security Advisor, noted in an interview with Bloomberg on the 13th that there is a consensus among all parties in the U.S. Congress regarding concerns over China's rise in advanced technology.

Anxiety among Chinese corporations has amplified that the import channels for semiconductors would be blocked due to such actions from the United States, leading them to stockpile advanced semiconductors. The situation is critical from the perspective of China because semiconductors are needed not only for the rapidly increasing demand for AI server semiconductors but also in fields like autonomous driving and humanoid robots, where they are being developed as next-generation technologies. China has been procuring semiconductors by circumventing U.S. export controls through third countries, but with the U.S. announcing regulations that block these circumventions, the urgency has escalated.

Kang Seong-cheol, a research fellow at the Korea Semiconductor Display Technology Association, said, “This resembles the situation in the past when the United States warned of regulations on advanced semiconductor equipment, prompting China to hoard equipment from global semiconductor corporations such as ASML and Applied Materials. They likely aimed to stockpile semiconductors by importing a large number of high-performance semiconductors for AI servers, vehicle semiconductors, and other fields being developed as next-generation industries, particularly given the added anxiety that regulations will deepen under the second Trump administration.”