China Warns Of Legal Retaliation Against US Chip Sanctions, Threatens Lawsuits For Aiding 'Discriminatory' Tech Crackdown

China has threatened legal action against any individual or organization assisting with or implementing U.S. semiconductor restrictions, escalating tensions in the ongoing tech rivalry between the world’s two largest economies.

What Happened: China’s commerce ministry said there could be “corresponding legal liabilities” for those involved in U.S. measures it characterized as “discriminatory restrictive measures” against Chinese firms, Reuters reported.

The warning comes after the U.S. published guidance last week cautioning companies against using Ascend AI chips from Huawei Technologies.

The dispute highlights growing friction as both nations compete for dominance in advanced technology. Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang recently criticized U.S. chip export controls as “exactly wrong for America,” revealing his company wrote off $5.5 billion in inventory and lost approximately $15 billion in sales due to these restrictions.

“China’s doing fantastic, 50% of the world’s AI researchers are Chinese and you’re not going to hold them back,” Huang said at Computex 2025, arguing American companies should be allowed to compete in China to “offset the trade deficit.”

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Why It Matters: The technology standoff has intensified since April, when China imposed retaliatory tariffs up to 125% on U.S.-made chips, while exempting Taiwan-manufactured semiconductors. This policy benefits companies like Advanced Micro Devices Inc. (NASDAQ:AMD) and Qualcomm Inc. (NASDAQ:QCOM) that outsource to Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), while potentially harming U.S.-based fabricators like Intel Corp. (NASDAQ:INTC).

Microsoft Corp. (NASDAQ:MSFT) co-founder Bill Gates recently noted that export bans have only accelerated China’s self-reliance efforts. “We made clear to them that they needed to make their own chips, and they’re making great progress on doing that,” Gates told CNN.

China’s ministry urged the U.S. to “abide by international economic and trade rules” and respect other countries’ technological development rights.

Image Via Shutterstock

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.