Chinese chip designers slow down processors to dodge US sanctions

The US imposed sanctions on Chinese computing power due to the fact that China is the world's second largest economy.

Chinese design houses have spent years and millions of dollars creating the blueprints for advanced processors to power the country's next generation of computers. Taiwan Semiconductor Manufacturing is the world's biggest contract chip maker.

The sanctions imposed by the US last month have thrown a wrench into their plans.

When Washington unveiled the controls, bothAlibaba andBiren conducted test runs of their latest chips at TSMC. According to six people briefed on the situation, the rules have forced the companies to stop further production.

The tech group founded by Jack Ma has suffered a number of setbacks. Since Beijing canceled its initial public offering, its shares have lost 80 percent of their value. Three people close to the matter say that the group's new chip was close to being unveiled.

All high-end processors entering China may be subject to an embargo because the US export controls extend to third country chip manufacturers. California chip companies were restricted from entering the United States.

China's domestic chip plants are decades away from being able to make cutting-edge chips like those designed byAlibaba.

Washington's sanctions aim to slow China's tech sector development, according to analysts.

Efforts to freeze a country in place for a technological level of hardware is a big deal. The US is attempting to restrict sales and close off the manufacturing road map in order to get to advanced levels of hardware.

High-end processors are the building blocks for research into supercomputing and artificial intelligence. China has a problem if Commerce doesn't give out licenses.

Kevin Wolf said that the US Department of Commerce was unlikely to grant such licenses. He said that the part of the rule states that applications will be thoroughly denied.