US-China Trade War Enters New Phase: How the Tech Industry Can Respond to Supply Chain Impacts

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The US-China trade war has evolved into a “new phase” centered on precise strikes against high technology, with its essence being a contest for supply chain dominance and becoming a continuous focus of economic news. Facing the impacts, technology enterprises must proactively build defense systems, with the three core pillars being: achieving diversified supply chain layouts, accelerating independent control of core technologies, and flexibly adjusting global market and product strategies.

Warning: The current narrative of “technological cooperation decoupling” is continuously intensifying the severity and urgency of the situation, potentially fundamentally disrupting the global scientific ecosystem on which development relies.

Key Points

• The US-China trade war has entered a new phase, and technology companies must actively respond to supply chain challenges.
• Companies should diversify supply chains across different countries to reduce dependence on a single region.
• Companies need to accelerate R&D of their own core technologies to reduce reliance on foreign technologies.
• Companies should flexibly adjust market strategies and explore new markets such as the Middle East and Southeast Asia.
• These strategies require long-term investment but can help companies grow amid challenges.

New Phase of Trade War: Core Impacts on Supply Chains

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The new phase of the trade war directly impacts the stability of global technology supply chains. The United States, through a series of precise control measures, has turned supply chains into the frontline of geopolitical games, triggering continuous economic news coverage.

Escalation of Chip and Software Controls

The control measures of the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) are becoming increasingly stringent. Its core strategy is to restrict China’s access to advanced computing chips, semiconductor manufacturing equipment, and key software. These measures not only include high-performance computing chips on the control list but also impose strict restrictions on the export of core software such as electronic design automation (EDA). This directly chokes the development throat of China’s semiconductor industry, with far-reaching long-term impacts.

Key Control Thresholds The United States has added new licensing requirements for items shipped to semiconductor manufacturing “facilities” in China, with highly specific technology node standards:

• Logic chips using 16/14 nm or below non-planar transistor architecture.
• DRAM memory chips with 18 nm half-pitch or smaller.
• NAND flash memory chips with 128 layers or more.

Tariff Barriers and Economic News Focus

High tariffs are another heavy blow. Under “Section 301,” the United States imposes high tariffs on various Chinese technology products. For example, tariffs on certain semiconductor products will be raised to 50% in 2025. These tariffs, combined with non-tariff barriers like the “Entity List,” directly increase enterprise production costs and compress profit margins. Each tariff adjustment becomes a global focus of economic news, bringing huge shocks to the market. Enterprises must directly absorb these new cost pressures in their financial statements.

China’s Countermeasures and Global Supply Chain Variables

Facing external pressure, China has also taken countermeasures, adding new variables to global supply chains. China has imposed export controls on key mineral resources such as gallium and germanium. China produces approximately 98% of global gallium and 68% of refined germanium, materials indispensable for manufacturing high-performance chips and optical fiber products. China’s control measures aim to safeguard national security and require exporters to provide end-user and end-use certifications. This move immediately triggered global market concerns, becoming headline economic news in major media and forcing international technology enterprises dependent on Chinese resources to reassess their supply chain vulnerabilities.

Technology Enterprise Countermeasures: Building Resilient and Independent Supply Chains

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Facing continuous external pressure, technology enterprises can no longer passively wait. Enterprises must take proactive action to build a new supply chain system that combines resilience and independence. This requires simultaneous efforts in three dimensions: supply chain layout, core technology, and market strategy, forming a combined punch.

Strategy One: Supply Chain Diversification and “China + N” Model

The “China + N” model has become the preferred strategy for enterprises to ensure supply chain security. The core of this model is not to completely withdraw from mainland China but to establish additional production or procurement bases in other countries or regions to diversify geopolitical risks. Many multinational technology giants have publicly announced their diversification plans.

• Apple： Is expanding its supplier network in Thailand while increasing smartphone and laptop production capacity in India and Vietnam.
• Samsung: Heavily relies on India for smartphone assembly.
• Dell: Has established new smartphone and laptop manufacturing centers in Vietnam.
• HP: Is shifting more personal computer and consumer electronics production to Thailand and Mexico.

Successful “China + N” strategies are not simply capacity transfers. Automotive parts supplier Autoliv chooses to co-develop products with secondary suppliers in mainland China, incorporating local innovation into its global product line. At the same time, Magna adjusts its business model by serving mainland Chinese local auto brands through platform-based solutions and leveraging its global network to help Chinese partners expand overseas markets.

However, supply chain reconstruction is not easy; enterprises must face the challenges and costs involved. Moving production facilities from mainland China to other countries is a complex and time-consuming process, typically requiring 12 to 24 months of planning and execution.

Warning: Transfer Is Not “Zero Cost” Supply chain diversification comes with high hidden costs and risks. Enterprises not only bear the construction costs of new factories but may also face intellectual property theft, supply chain disruptions, and legal disputes caused by sudden withdrawals. At the same time, operating in new countries requires dealing with complex international tax laws and potential tariff structures.

Each alternative country has its unique challenges, and enterprises need to carefully evaluate them.

Strategy Two: Accelerate Independent R&D of Core Technologies

Supply chain diversification can only treat the symptoms; independent control of core technologies is the fundamental cure. External restrictions are forcing China’s technology industry to accelerate shedding technology dependence and moving toward true independence. Driven by government-led policies such as “Xinchuang” (Information Technology Application Innovation), enterprises are investing huge funds in independent R&D.

The semiconductor industry is the top priority for independent R&D. Although mainland Chinese enterprises still lag about two years behind world-leading levels in advanced logic chips, significant breakthroughs have been made in some areas. For example, Yangtze Memory Technologies Corp. (YMTC)'s NAND flash memory chip technology has caught up with international competitors. Despite U.S. sanctions restricting access to advanced EUV lithography machines, Chinese enterprises are still striving to catch up.

Key Breakthrough Cases The cooperation results between Huawei and Semiconductor Manufacturing International Corporation (SMIC) are particularly noteworthy. They successfully developed 7-nanometer level chips, such as the Kirin 9000S mobile processor, marking substantial progress in mainland China’s chip manufacturing capabilities without external advanced equipment support.

The wave of independent innovation has expanded from chips to broader technology fields:

• Artificial Intelligence: DeepSeek company’s AI large language model has achieved international competitiveness in performance.
• Electric Vehicles: BYD not only leads in sales but has also achieved independent innovation in batteries and complete vehicles.
• Aerospace: COMAC is developing the C929 wide-body aircraft to compete with similar models from Boeing and Airbus.

Strategy Three: Adjust Market and Product Strategies

While reconstructing supply chains and increasing R&D, enterprises must flexibly adjust their global market and product strategies to adapt to the new international landscape. Facing trade barriers and geopolitical tensions, many Chinese technology enterprises are abandoning traditional “national-level” market expansion models and turning to more precise "micro-regional" focusing methods.

This strategy allows enterprises to bypass major conflict areas and penetrate emerging markets with relatively friendly regulatory environments and huge market potential. The Middle East and Southeast Asia are becoming new hot spots for Chinese technology enterprises going overseas.

• BYD plans to more than double its showroom numbers in the Middle East by 2026.
• Autonomous driving companies WeRide and Pony.ai are piloting driverless taxi services in Dubai and other places.
• Companies like Huawei, Alibaba Cloud, and Tencent have long been deeply engaged in the Gulf region, providing local areas with key digital infrastructure such as cloud platforms and 5G networks.

Entering new markets requires not only strategic adjustments but also solving practical operational challenges. When enterprises expand business to Vietnam, Mexico, or the Middle East, complex cross-border payments and multi-currency fund management become major difficulties. Enterprises need to cooperate with institutions like licensed banks in Hong Kong to handle large international trade settlements. At the same time, adopting fintech solutions like Biyapay that support global multi-currency payments can efficiently pay global suppliers and employees, simplify financial processes, and reduce operational costs. Each successful market strategy adjustment may become material for new economic news reports.

Finally, products themselves must adapt to local markets. Enterprises must find a delicate balance between global brand consistency and localization relevance.

Localization: Details Determine Success or Failure Successful localization requires in-depth research into the target market’s culture, religion, and consumer habits. For example, Coca-Cola’s “Share a Coke” campaign achieved great success by printing popular local names on bottles. In contrast, Chevrolet Nova cars suffered a setback in the Latin American market because “Nova” sounds like “no va” in Spanish, meaning “doesn’t go.” This reminds enterprises that a seemingly minor detail can determine a product’s fate overseas.

In the new phase of the US-China trade war, technology enterprises must abandon the illusion of passive waiting and adopt a proactive change posture. Responding to supply chain impacts cannot be achieved by a single strategy but must be a combined punch of “supply chain diversification,” “core technology independence,” and “market strategy flexibility.”

The current huge challenges are precisely the strategic opportunity period forcing China’s technology industry upgrade, shedding path dependence, and achieving true technological independence.

FAQ

Do SMEs also need to adopt the “China + N” strategy?

Yes. SMEs also face supply chain risks. They can adopt more flexible approaches, such as cooperating with small-batch suppliers in multiple regions or using cross-border e-commerce platforms to find alternative procurement channels. This helps enterprises diversify risks without large-scale asset transfers, enhancing operational resilience.

Besides chips, which technology areas need priority for independent control?

Enterprises should focus on basic software, core algorithms, and key materials.

• Basic Software: Such as operating systems and industrial design software (CAD).
• Core Algorithms: Especially in artificial intelligence and big data fields.
• Key Materials: Such as high-performance chemicals for batteries and displays.

Technological breakthroughs in these areas can fundamentally enhance industrial security.

What is the biggest challenge for enterprises entering new markets like the Middle East?

The biggest challenge lies in cultural and regulatory localization. Enterprises must deeply understand local business habits, religious norms, and consumer preferences. At the same time, handling complex cross-border payments and tax compliance is also a major difficulty. Cooperating with local professional institutions is an effective way to overcome these challenges.

How long does it take to implement these supply chain and technology strategies?

These strategies are long-term plans and cannot be achieved overnight.

1. Supply Chain Transfer: Usually requires 12 to 24 months.
2. Core Technology R&D: May need 5 to 10 years or even longer to achieve fundamental breakthroughs.
3. Market Strategy Adjustment: Initial entry into new markets may need 6 to 12 months to stabilize operations.