As US chip restrictions widen, China balances export success & import dependency

US lawmakers recently unveiled legislation that would strengthen restrictions on exports of chipmaking tools to China. The MATCH Act (Multilateral Alignment of Technology Controls on Hardware) would affect key non-American companies — including ASML and Tokyo Electron.

This latest move highlights China’s persistent dependence on a narrow set of critical external suppliers in this sector, despite the nation’s success building its own globally competitive chipmaking industry. As our first chart shows, China’s semiconductor output has almost quadrupled over the past 10 years — but chip imports and exports have been climbing roughly in tandem.

Our second chart tracks the sources of Chinese imports of semiconductor equipment. The Netherlands, home of ASML, stands out — more than doubling its share after 2023. (ASML is notable for its deep ultraviolet immersion lithography machines, which will be barred from sale to China — traditionally the Dutch company’s largest market, though it was overtaken by South Korea in the most recent quarter.)

Our third chart returns to China’s chip imports. China is a crucial market for chipmakers in ASEAN nations like Singapore and Malaysia — but even more so in South Korea, home to memory-chip giants like SK Hynix. Still, China has become a less important market versus its 2010s peak. (South Korea sent more than 70% of its exported chips to China in 2018, versus 53% at the end of 2024.)

This likely reflects the success of China’s own industry as well as US pressure on allied nations.

American efforts to limit China’s access to semiconductor technology have been a bipartisan initiative. (Last year, we discussed the Trump administration’s purchase of a stake in Intel.)

As our final chart shows, US efforts to “reshore” the chip sector have had a striking effect on Chinese exports. Electronics exports have fallen behind China’s wider export trend since the Biden administration’s 2022 CHIPS Act.

In summary, China’s ability to move up the value chain still depends on external factors that shape the speed and ceiling of the domestic industrial ambitions; this also has consequences for exporters dependent on the Chinese market.