Walling off China from America’s Best Computer Chip Technology
An in-depth look at U.S. export controls and technology politics
By Noah Berman and Eliot Chen
September 7, 2025
Over the past six years, beginning with Donald Trump’s first term and continuing under President Joe Biden, the U.S. government has implemented a steadily tightening regime of export controls aimed at restricting China’s access to advanced American computer chip technologies. This strategic move has also involved securing cooperation from key allies, notably the Netherlands and Japan, to limit the export of high-end semiconductor manufacturing equipment and design software to China.
However, a recent development in August 2025 — an agreement between the U.S. government and semiconductor giants Nvidia and AMD — appeared to diverge from this arc of increasing restrictions. The deal permits these companies to sell certain categories of computer chips to China, provided they surrender a 15 percent royalty cut to the U.S. government. This arrangement suggests a nuanced recalibration of U.S. policy towards China’s semiconductor sector.
Balancing National Security and Commercial Interests
The core question driving this recalibration is whether easing restrictions on lower-grade chips genuinely undermines American national security interests or if it represents a pragmatic compromise. While hardline "China hawks" worry that any chip exports could inadvertently boost China’s technological capabilities, others argue that maintaining some commercial engagement keeps China dependent on American chip technologies. This dependency, in turn, could offer Washington valuable leverage and sustain revenue streams for U.S. semiconductor makers, equipment manufacturers, and software developers.
Moreover, alongside looser controls on some chips, the U.S. has doubled down on restricting China’s acquisition of advanced chipmaking equipment and associated software, aiming to block China’s ability to produce cutting-edge semiconductors domestically. This layered approach reflects a strategic attempt to "wall off" China from only the most sophisticated technologies while allowing some controlled trade in lower-tier products.
The Complex U.S.-China Trade Relationship
The situation is far from straightforward. As highlighted in Noah Berman’s analysis, the U.S.-China trade relationship is heavily intertwined through foreign-invested companies operating on both sides. Approximately 30 percent of China’s export manufacturing is conducted by foreign firms, including U.S. entities, mirroring how foreign-invested companies account for roughly 20 percent of exports from the United States. These firms have largely adapted to tariffs introduced during Trump’s administration and continued under Biden, but further tariff increases could push them into reconsidering their strategies.
In the broader context, America’s policy towards China today balances competing goals: safeguarding technological superiority, protecting national security, ensuring the vitality of U.S. semiconductor industries, and managing the economic realities of deep interdependence.
Additional Perspectives in This Week’s Issue
Apart from the semiconductor trade story, this edition of The Wire China features several insightful pieces:
- The U.S. Exporters Operating From China – An examination of American companies leveraging Chinese manufacturing and export operations.
- The Mother, The Son, and The War – Lucy Hornby explores the influential life of Qi Xin, mother of Xi Jinping, and how her experiences during the Japanese invasion shaped the family legacy.
- Q&A with Dan Wang – The author of Breakneck discusses the profound differences in governance and cultural outlook that shape China’s rapid infrastructure development versus America’s more legalistic approach.
- Paper Allies – Manoj Kewalramani evaluates the recent summit between leaders of China, Russia, and India, arguing that despite appearances, their alliance remains fraught with fundamental disagreements.
As the world’s two largest economies continue to navigate a complex web of competition, cooperation, and confrontation, Washington’s strategy on chip exports encapsulates the challenges of limiting technology transfer without undercutting American commercial interests or inadvertently spurring rival innovation efforts within China.
For some in the U.S. administration, the question is not merely how to block China today, but how to maintain leverage and shape the long-term global technology landscape amid shifting geopolitical realities.
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