Beijing wants Chinese outfits to seek alternatives to US silicon

Four of China's top industry bodies have published advice suggesting members source fewer semiconductors from US silicon slingers, because supply chain issues caused by sanctions mean they are "no longer secure and reliable."

"To ensure the safe, stable and sustainable development of my country's internet industry, I call on domestic companies to … seek to expand cooperation with chip companies in other countries and regions, and actively use chips manufactured in China by domestic and foreign companies," reads a Tuesday statement by China's Internet Society.

The nation's Semiconductor Industry Association, Association of Automobile Manufacturers, and Association of Communication Enterprises all published similar opinions on the same day, and coincidentally state-controlled outlet Xinhua was kind enough to summarize them and their message. That message is that China opposes US sanctions, needs reliable suppliers, and ensuring the "security" of local industry means choosing chips made at home by companies that don't have US entanglements.

The references to "security" in the pieces aren't about infosec – it appears they are referring to reliability of supply chains.

If Chinese organizations follow this advice they'll end up with inferior PCs and servers. Lenovo recently created a laptop that uses a made-in-China CPU from local x86 licensee Zhaoxin that struggles to match the performance of five year old AMD and Intel chips. Another Chinese chipmaker, Loongson, is also believed to be about four years behind state-of-the-art desktop CPUs. Loongson's server CPUs are also modest.

Chinese buyers may do better in the cloud, where Alibaba's Yitian 710 server-grade Arm CPU was rated in April as the fastest such processor offered by any hyperscaler.

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While Chinese silicon may not match that from stateside stalwarts Nvidia, Intel, or AMD, it could eventually become easier to obtain after Beijing banned exports to the US of some rare earths used in the semiconductor manufacturing process. China blocked exports of gallium, germanium, and antimony on grounds they could be used for military purposes – the same pretext the US has used for bans of advanced semiconductors to China.

US-based semiconductor firms have not reacted to the ban and may not need to – chipmakers stockpile critical supplies, and alternative sources exist.

As we've seen with China and Russia managing to acquire sanctioned tech, some jurisdictions are happy to facilitate gray market trading.

But between the rare earths ban, and the advice to consider not buying US chips, China is clearly fighting back against American policy. These latest developments came the day after the Biden administration extended sanctions to prohibit exports of high-bandwidth memory tech that is necessary for AI systems. ®