A reason why the US can’t leave China? Potato chips.

In May, Micron Technologies, the Idaho chipmaker, was dealt a serious blow as part of the technology war between the US and China. The Chinese government banned companies that process critical information from buying Micron’s chips because the company failed a cybersecurity assessment.

said Micron could destroy the change about one-eighth of its worldwide turnover. Still, the chipmaker announced in June that it would increase its investment in China, adding $600 million to expand a chip packaging facility in the Chinese city of Xian.

“This investment project demonstrates Micron’s unwavering commitment to its Chinese operations and team,” said an announcement on the company’s Chinese social media account.

Global semiconductor companies are in an extremely awkward position as they try to bridge a growing gap between the United States and China. The semiconductor industry has become the zero point of the technology rivalry between Washington and Beijing, with new restrictions and punitive measures imposed by both sides.

US officials say US products have been fed into Chinese military and surveillance programs against US national security interests. They have increasingly imposed restrictions on the types of chips and chip-making equipment that can be shipped to China, and are offering new incentives, including subsidies and tax credits, for chipmakers who choose to establish new operations in the United States.

But building factories can take years and ties between countries remain strong. China is an important market for chips because there are many factories that make chip-rich products, including smartphones, dishwashers, cars and computers, which are both exported around the world and purchased by consumers in China.

Overall, China accounts for about a third of global semiconductor sales. But for some chipmakers, the land accounts for 60 percent or 70 percent of their sales. Even when chips are manufactured in the United States, they are often sent to China to be assembled and tested.

“We can’t just flip a switch and say you have to get everything out of China all of a sudden,” said Emily S. Weinstein, a research fellow at Georgetown’s Center for Security and Emerging Technology.

The industry’s dependence on China highlights how a close – but highly contentious – economic relationship between Washington and Beijing poses challenges to both sides.

Those tensions were reflected during Treasury Secretary Janet L. Yellen’s visit to Beijing this week, where she attempted to walk a fine line in criticizing some of China’s practices while insisting the United States had no intention of to cut ties with the country.

Ms Yellen criticized China’s recent punitive measures against foreign companies, including restricting exports of some minerals used in making chips, and suggested such actions were why the Biden administration was trying to make American manufacturers less dependent to make of China. But she also affirmed that the relationship between the US and China is strategic and important.

“I’ve made it clear that the United States is not seeking a complete separation of our economies,” Ms Yellen said during a roundtable of US companies operating in China. “We try to diversify, not decouple. A decoupling of the two largest economies in the world would destabilize the global economy, and that would be virtually impossible.”

The Biden administration is about to invest heavily in US semiconductor production to lure factories from China. Later this year, the Department of Commerce is expected to begin distributing funds to help companies build U.S. chip facilities. That money comes with obligations: companies that accept financing must refrain from expanding high-tech production facilities in China.

The government is also considering further restrictions on the chips that can be shipped to China as part of an effort to expand and finalize the sweeping restrictions it issued last October.

These measures could include potential restrictions on sales to China of advanced chips used for artificial intelligence, new restrictions on Chinese companies’ access to US cloud computing services, and restrictions on US venture capital investment in the Chinese chip sector, according to people familiar with are with the plans.

The government is also considering stopping the licenses it has granted to some US chip makers that have allowed them to continue selling products to Huawei, the Chinese telecom company.

Japan and the Netherlands, home to companies that make advanced chip manufacturing equipment, have also imposed new restrictions on their sales to China, partly at the urging of the United States.

China has issued its own restrictions, including new export controls on minerals used in the production of chips.

Amid tougher regulations and new stimulus programs from the United States and Europe, global chip companies are increasingly looking beyond China when choosing where to place their next major investments. But construction of these facilities will likely take years, meaning any changes in the global semiconductor market will happen gradually.

John Neuffer, the president of the Semiconductor Industry Association, which represents the chip industry, said in a statement that the continued escalation of controls posed a significant risk to the global competitiveness of US industry.

“China is the world’s largest semiconductor market and our companies simply need to do business there to continue growing, innovating and staying ahead of global competitors,” he said. “We push for solutions that protect national security, prevent accidental and lasting damage to the chip industry, and prevent future escalations.”