China buys $40 billion worth of chip manufacturing equipment to circumvent US sanctions

Chinese manufacturing companies are rapidly investing in new semiconductor factories in an effort to expand the country’s production capacity.

China’s imports of chip-making machines jumped last year as firms ramped up investment in an attempt to circumvent U.S. efforts to curb the country’s semiconductor industry, Bloomberg reported.

Imports of equipment used to make computer chips rose 14% in 2023 to nearly $40 billion, the second highest amount on record since 2015, according to Bloomberg calculations based on official customs data.

The increase came despite a 5.5% drop in total imports last year, underscoring the importance that the Chinese government and the national chip industry place on achieving self-sufficiency.

Chinese chipmakers have been rapidly investing in new semiconductor factories in an effort to expand the country’s capacity and circumvent export controls imposed by the United States and its allies.

These restrictions hinder Chinese companies’ access to the equipment required for producing the most powerful chips and impede the development of China’s high-tech sector, which the United States perceives as a threat.

Last year, Chinese imports from the Netherlands surged ahead of new export controls that will further limit the ability of companies such as Semiconductor Manufacturing International Corp. to obtain the latest equipment.

In December, imports of lithography equipment from the Netherlands jumped nearly 1000% year over year to $1.1 billion as firms rushed to buy it before the Dutch restrictions began this month.

Even before the restrictions went into effect, Dutch company ASML Holding NV canceled shipments of some of its most advanced machines to China at the request of the US government, Bloomberg reported earlier this month. The cancellation came a few weeks before the ban on exports of high-tech chip manufacturing equipment went into effect.

Let’s recall that Western economic sanctions against Russia for its war in Ukraine have not achieved the expected results yet, as Russia continues to find ways to evade restrictions and import microprocessors, printed circuit boards, and other electronic and radio technical components.

Advanced technology that Moscow cannot produce at home is essential for Russia’s ability to sustain its weapon production capabilities. This is critical since the FPV attack drones that Russia has begun to mass-produce require foreign “dual-use components.”

Some nations are assisting Russia, especially China, which is the country’s main economic partner in this sector, according to media reports. It “exchanges” electronics and their components for Russian energy resources.

China provides all of Russia’s electronic needs by bypassing sanctions, either directly or via middlemen. It is important to note that since 2022, Russian imports from the world have decreased by about 38,8% because of the implemented sanctions.

However, China kept its exports of electronics to Russia nearly at the pre-war level, while many countries stopped doing so, and Moscow’s imports dropped, according to the trademap.org data.

Read more: Stopping China’s electronic exports to Russia can help to end the war in Ukraine