Chinese chip smuggling presents fresh US challenges

Significance

Underground markets and business reroutes through overseas subsidiaries are helping companies evade US restrictions, undermining Washington’s efforts to block Chinese access to critical technology amid rising military and economic rivalry.

Impacts

• Chip smuggling may be increasingly used by universities and research institutions for research and development purposes.
• Washington will spend political capital on convincing partners in the region to prioritise semiconductor smuggling enforcement.
• China's use of foreign data service providers with access to advanced chips will continue to increase.