A Teradyne representative stated on Monday that the semiconductor testing equipment supplier Teradyne, opens new tab, withdrew manufacturing worth approximately $1 billion from China last year due to supply chain problems caused by U.S. export laws.

The company subcontracted to Flextronics to manufacture its semiconductor test equipment, which was mostly manufactured at a factory in Suzhou.

In an attempt to prevent American technology from assisting China’s military, U.S. regulations published in October 2022 limited exports to semiconductor manufacturing facilities in Massachusetts, prompting Teradyne, a Massachusetts-based company, to relocate its production.

As the U.S.-China tech war heats up and regulators impose trade restrictions on sensitive areas like chip manufacturing, many American businesses have been attempting to lessen their reliance on China in recent years.

Teradyne, which releases its profits on Tuesday, alerted investors to the possible effects of the October regulations in its 2022 annual report. In October 2023, the company stated that the limits had an impact on both its manufacturing and development operations as well as its sales to certain Chinese enterprises.

Brian Amero, director of worldwide compliance and ethics at Teradyne, spoke about the departure from China during a virtual export conference last Friday.

“We did manufacturing in China, so we had to get an emergency authorization to continue that activity,” Amero said at the Massachusetts Export Center’s annual export expo. “We decided that was too risky so we moved manufacturing out of China — at no insignificant expense.”

Amero said that supply chain interruptions resulted from certain vendors refusing to ship to the business even after being given permission. According to the corporation, it ultimately obtained licences to lessen the effects of the requirements, and when the United States revised the regulations in October 2023, it made an exception for testing apparatus used after a wafer is manufactured.

“It’s still a front-burner issue,” Amero said during a conference session titled, “The China Balancing Act: Complying with Export Controls While Maintaining Your Sanity.”

He said Teradyne had been “significantly impacted by the rules,” even though the company had not been a “direct target” of them. And market share is where we’re witnessing that.”

Amero did not offer any figures. However, compared to 16% for the same quarter last year, China accounted for 12% of revenues for the three months that ended on October 1.

(Adapted from EconomicTimes.com)