China Ramps up Imports of U.S. Computer Chips as Trade War Worsens

However, the frontier for this trade war now seems to have shifted into a squabble over technological dominance, and new data is showing that in typical fashion, China is exhibiting some foresight to ensure that they stay in the ring.

China is stockpiling U.S. computer chips, as companies fear a "Silicon Curtain" may soon cut them off from American technology https://t.co/5TdDduyVR7

— Bloomberg Markets (@markets) December 4, 2019

Building the Warchest

According to a Bloomberg report, the Chinese are accumulating American made computer chips in preparation for a potential restriction from the country’s tech space. Data cited by Bloomberg revealed an increase in computer chips and the equipment used in producing them over the last three years. This coincides with a sharp drop in the volume of overall purchases from the U.S due to the trade war. In August 2019, the imports of chips amounted to about $1.7 billion, the highest level recorded since October 2017.

Uncle Sam is King of the Chips

The United States remains an authority when it comes to the sales and production of semiconductors. The country is home to both Qualcomm and Intel, two of the world’s largest semiconductor companies. The chips produced by these companies have continued to power the advancement of the technological age, leaving companies helpless without them. Dealing with these companies means relating to the U.S. government. While the Chinese have made attempts at building self-sufficiency in semiconductor manufacturing, none of its efforts have yielded significant results. If Washington suddenly decides to bring these semiconductors into play as part of the trade war, the effects on Chinese tech companies could be devastating.

The FCC bans Huawei and ZTE from a subsidy program, hitting one of the firms’ U.S. success stories: sales to small wireless and broadband providers https://t.co/eeKfWp4PAH via @WSJ

— Robert Wall (@R_Wall) November 22, 2019

The United States has shown in the past that it isn’t above restricting the ability of Chinese tech firms and investors to operate within its borders. In the past month alone, the government barred companies from using federal subsidies to transact with Huawei and ZTE. Now, Chinese tech companies are looking at a possible future where their ability to trade with their American counterparts will be severely hampered. This development isn’t particularly new. Huawei has adapted to the restrictions on its activities pretty well this year, even launching its operating system after being bullied out of Google’s Android platform back in May. Last month, the company posted a jump in overall sales for Q3. Now that they’re stocking up on the semiconductors, the Chinese seem to be paving the way towards their own tech autonomy.

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