Recently USA imposed an export ban to China on hardware relating to AI and other hi-tech industries. This has caused a large disturbance to a smoothly running supply chain. The impact of it on current and future business has already begun as companies involved currently have downgraded their earnings and reorganised their workforce. In impacting the future business, Apple has frozen its plan to use China’s YMTC chips.
Though it makes sense for the USA to take such a step for a positive impact over the long term as recent years have shown such economic restrictions create much more negative impacts in the short and medium term especially when the industry involved is critical.
China in August imported $33Bn in electronic integrated circuits (ICU) which comes to almost 449(100 Mn) units in a single month. Though the inventory in the supply chain might help avoid an immediate disturbance but given the complexity of the industry a single stoppage of service can cause a large-scale ripple effect.
Though China has been preparing its chip industry for a few years the majority of high-tech requirements are still imported. Thus, such a ban will not only impact imports it will also impact the exports of finished electronics. Bringing another negative impact on the already disoriented supply chain. This step might even bring Taiwan more into focus as it is the global hub of industry and is already facing geopolitical uncertainty.