China is in for ‘a tough time’ as U.S. targets tech sector, expert says

CNBC reports that China is in for “a tough time” in the short term as the U.S. tries to deny it access to crucial tech components, a business consultant told on Monday.

Tensions between the two countries in the technology space heated up over the weekend with the U.S. considering blacklisting China’s largest chipmaker, Semiconductor Manufacturing International Corporation or SMIC.

The measure would restrict SMIC from obtaining specific goods made in the U.S. Even though China has been developing its own semiconductor manufacturing capabilities, companies such as SMIC still relies on American equipment in its production line.

Richard Martin, managing director of IMA Asia, told CNBC’s “Squawk Box Asia” that China may have to “look elsewhere” for supply of semiconductors if SMIC’s ability to produce them is crippled by the U.S. move.

“The problem with looking elsewhere is if you go to Europe or if you go to Japan, the companies in Europe and Japan are using U.S. machinery at some point in their production process. And therefore ... they can be hit by this U.S. effort to choke it off,” he said.

“So what China needs to do is move the entire supply chain into China,” he added.

Such effort may take years given that SMIC is still “a long way” behind its rivals in terms of chip-making capabilities, said Martin.