US chip makers fear new restrictions against China
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Executives from the largest US chip companies (Intel, Qualcomm, Nvidia) met on July 17 with senior US officials and discussed the possible implications of a tightening ban on exports of chips to China. The conversation was attended by Secretary of State Anthony Blinken, Secretary of Commerce Gina Raimondo, Director of the National Economic Council Lyle Brainard and National Security Adviser Jake Sullivan.
Industry representatives expressed concern about the possible negative impact of tighter controls on semiconductor supplies to China, which The Wall Street Journal and Financial Times previously reported the White House could introduce this month. We are talking about licensing the export to China of chips for artificial intelligence (AI), which can also be used in military technologies. Blinken listened to US high-tech businesses’ assessments of their activities in China and the current state of semiconductor supply chains, and gave his opinion, US State Department spokesman Matthew Miller confirmed. According to chipmakers, Washington’s new measures could lead to squeezing American companies out of the Chinese market and reduce their revenue.
The meeting also discussed the introduction by the Chinese government of restrictions on the export of a number of products related to gallium and germanium, which are used in the manufacture of semiconductor products. In addition, chip companies have called on the US authorities to expedite the distribution of subsidies under the 2022 Chips and Science Act.
On the same day, July 17, the US Semiconductor Industry Association (SIA) urged the administration of President Joe Biden to “refrain from further restrictions [против КНР] until it engages more actively with industry and experts to assess the impact” of the restrictions being introduced. They now fear that the tightening of regulations by the United States could “disrupt supply chains, cause significant market uncertainty and provoke an escalation of Chinese retaliation.” In addition, the industry asked to be allowed “permanent access to the Chinese market, the world’s largest commercial market for semiconductors.”
The US Department of Commerce is considering a ban on deliveries to customers not only in China, but also in “other countries that are of concern to Washington” chips from Nvidia and AMD without licensing. Nvidia CEO Jensen Huang has previously said that the export bans already in place left Nvidia with its “hands tied behind its back.” In November 2022, Reuters wrote that Nvidia had to develop the A800 and H800 GPUs specifically for China in order to fully comply with US export control regulations. Now they are also under the threat of an export ban.
At the same time, on July 18, Bloomberg reported, citing sources, that the Biden administration’s earlier plans in the press to limit investment in China would focus only on advanced technologies (semiconductors, quantum computing, AI) and would probably not come into force until 2024. due to bureaucratic procedures. The administration decided in this way to spare its industry. But the measures being prepared, according to Chinese Foreign Ministry spokesman Mao Ning, impede cooperation between the two countries.
$180 billion
was, according to the Semiconductor Industry Association (SIA) of the United States, the revenue of American semiconductor manufacturers in the PRC market in 2022. This represents more than a third of their total sales of $ 555.9 billion
Over the past few months, there has been a split between the positions of the US authorities and microchip manufacturers, who really do not want restrictions against China for several reasons, says Alexei Maslov, director of ISAA MSU. Firstly, China is the largest consumer of microchips, and secondly, this country also produces equipment for the same industry in the United States. The same Nvidia risks losing hundreds of millions of dollars in revenue per year if a new package of restrictions is introduced. Many American companies also understand that the Chinese are actively developing their analogues of chips, and if they leave now, it will be almost impossible to return, the expert adds. Maslov considers the pressure from American business on the authorities not so great that they listen to his representatives. If it increases, then the situation can really change, but under a different US president, he concludes.
By itself, the desire of American companies to do business with China as usual cannot change the position of the Biden administration, says St Petersburg University professor Yana Leksyutina. The position of American business, including in the field of semiconductors, has never changed – it has always strived for healthy cooperation. Business has commercial interests in the foreground, while the authorities defend national interests and, according to Leksyutina, the latter are more important. Based on this, Washington now needs to restrain the development of the PRC, including technological. American companies still have the opportunity to legally lobby their interests, but this process has no guarantees of success, the expert concludes.
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