Ministers slam the door on advanced semiconductor sales to China
THE Government has cracked down on the export of semiconductor technology to China amid a joint Western push to restrict Beijing’s access to advanced microchips.
Official export control figures show that the Department for Business and Trade blocked the vast majority of licence applications for companies seeking to export semiconductor technology to China last year.
In previous years, the Government was far more lenient about approving exports, the figures suggest. Several countries including the US, the Netherlands and Japan have agreed to work together to restrict Chinese access to hi-tech semiconductor technology. Britain has not formally joined the deal but the figures suggest it is taking a tougher line.
Concerns range from Chinese companies copying Western technology to the chips ending up inside weapons or artificial intelligence systems. Figures from a database run by the Export Control Joint Unit, which administers export controls for military and dual-use items, show the UK has refused 14 licence applications for semiconductor technology to China in 2023 and approved just two.
The prior year, it refused just five licences, while issuing 26, and in 2021, it issued 26 licences and refused nine.
The majority of refusals were for semi- conductor manufacturing equipment, alongside components and software to run the equipment. Nine of the licence refusals – the majority – were for sale to government customers, the figures say.
Semiconductors are the essential foundation of modern computer systems and the most modern and powerful are crucial to developing AI.
The figures do not reveal what type of technology that companies were looking to export, but the higher number of refusals suggest a stricter approach to the export of British technology.
British AI chip company Graphcore closed its Chinese business in November and laid off its staff in the country, citing export controls on selling technology in the country, although US restrictions are believed to have been a significant factor.
Earlier this month, Cambridge-based semiconductor company Arm also laid off staff in China. It has warned that growing political tensions could affect its business there, and the UK and US have reportedly blocked it from selling advanced chip designs in the country.
The Government has also forced Nexperia, the Chinese-owned buyer of Britain’s biggest microchip facility, to sell the business. In November, Nexperia said it would sell Newport Wafer Fab to US company Vishay.
Successive administrations in the US have restricted sales of high-end semiconductor technology to China in an attempt to hobble the country’s technological prowess. China has responded to microchip controls by restricting the export of germanium and gallium, two elements widely used in computer chips and other technologies such as solar panels. The UK’S semiconductor strategy, published in June, promised to apply export controls to protect national security. At the time, the Government said it would work with business on potentially expanding how the export control regime applied to semiconductors, vowing to “protect the most sensitive UK semiconductor companies and technologies”.
A government spokesman said: “We have strengthened the rules to prevent items that could be intended for military use from falling into the wrong hands. While we cannot comment on specific cases, we assess each application on a case-by-case basis against the export licensing criteria and keep our control regime under regular review.”