Josh Horwitz

SHANGHAI, (Reuters) – The sweeping sanctions imposed by Russia to prevent it from global exports goods ranging from computers to chips and electronic devices are expected to encourage China’s push to self-reliance in its semiconductor industry.

Washington announced Thursday’s Russian invasion of Ukraine as part of an array of measures. It also announced export restrictions that will require companies producing high- and lower-tech products overseas to apply for a license from the United States to ship to Russia.

China is similar to Russia in lacking advanced manufacturing capabilities for chip production, but its long-term goal is independence and self-reliance within the semiconductor industry.

It was made clear by Huawei Technologies Co Ltd’s collapse in smartphone sales after it received U.S. sanctions for 2019 which cut off much of the overseas supply of chips and prevented the company effectively from making its own.

Due to Russia’s sensitive subject, a Chinese chip consultant said that China will “watch and learn from” the impact of sanctions on Russia.

The Russians have a failing chip industry, and they rely heavily on global semiconductors. It is possible that technology issues may arise from the sanctions, which will strengthen Beijing’s resolve to claim the technology.

Washington added sanctions in order to block China from achieving tech supremacy. This included the expansion of sanctions to Semiconductor Manufacturer International Corp (SMIC), which will be China’s largest chipmaker, and its top-selling semiconductor maker Semiconductor Manufacturing Intercorp (SMIC), for 2020.

SMIC was made to stop plans to produce some kinds of advanced chips after the U.S. pulled an export licence for ASML Holding (NASDAQ) NV, which is a Dutch-based lithography machine maker.

China has been the largest global importer of chip chips over the last ten years. This is part of “Made in China 2025”, which calls for self-sufficiency in critical components to 70% by the end of the decade.

Venture capital financing and other incentives are driving rapid growth in the country’s chip industry. However, the country has a small share in global chip exports – its fabless chipmakers hold about 16% of the global market according to Semiconductor Industry Association.

It also limit the assistance China can provide to a Russia heavily sanctioned.

A senior U.S. official stated that China alone cannot supply Russia’s military critical needs.

China doesn’t produce the highest technology nodes. Both Russia and China are dependent on U.S. technology and other suppliers to fulfill their requirements.

According to U.N. Comtrade data in 2020, China exported approximately $10 billion of electronic goods to Russia. This accounts for around 20% of China’s total exports.

A large portion of Russian smartphone shipments comes from China, where top-sellers include Realme and Xiaomi (OTC.) Corp.

Doug Fuller of the City University of Hong Kong, which studies China’s technology policies said that Russia’s chip consumption was not large and about half of it is likely to be from China.

China could export $200 million more if it is unable to import chips from abroad. Russia can also not make certain chips Russia requires.