At a recent electronics exhibition in Shanghai, semiconductor companies featured slogans such as “Offering complete domestic solutions” and “Use Chinese chips, love Chinese chips.” That is the hope. The reality is that, love them or not, China still needs certain American chips that are essential for cars and other industrial goods. The vulnerability was revealed when Beijing in late April exempted eight categories of U.S.-made chips from the 125% tariffs it imposed on American goods in the trade war with President Trump. The decision followed lobbying by Chinese automakers, said people in the industry. One consequence of the trade war has been to expose each country’s pain points in its reliance on the other. Trump quickly exempted from his main tariff iPhones and certain other electronics that are made primarily in China, and Beijing flaunted its ability to hurt American industry by putting restrictions on the export of certain rare-earth minerals where China has a supply-chain chokehold. The U.S. controls some chokepoints, too. Although they account for only a small portion of Chinese chip imports, the American products include key chips used in cars such as microcontroller units, which are like minicomputers, as well as analog chips to handle signals.

Full report : Beijing’s decision to exempt eight types of US-made chips from tariffs came after auto industry lobbying, exposing China’s dependence on US auto chips.