According to S&P Global Ratings, a businesses could take decades to catch up in the chipmaking race since the economic powerhouse is hampered by limited access to modern chips and equipment.

In a report titled "China's Chip 'Moon Shot'--The Response To Restrictions," S&P stated that despite having a big mature chip sector that already provides electric vehicles (EV), cellphones, and PCs, mainland China continues to primarily rely on imported technology from the US, Japan, and Europe.

The world's second largest economy is now facing a major setback as the United States, backed by Japan and the Netherlands, prohibits the shipment of advanced semiconductors for artificial intelligence, military applications, and supercomputing to China.

"Recent restrictions imply that it could take decades for Chinese chip makers to catch up to global firms in the production of advanced semiconductors," said Clifford Kurz, the credit rating agency's Greater China technology chief. "It will require significant time and a mobilization of national resources." 

Even before the restrictions, China's chip sector lagged behind in advanced chip manufacturing due to a lack of intellectual property cores, a lack of native breakthrough chip technology, and domestic equipment producers reliant on foreign expertise.