Tech

Tech Rivalry & Biden Tightens AI Semiconductor Exports to China

Tech Rivalry US Administration Strengthens Controls on Semiconductor Exports to China”

Tech Rivalry

The Biden administration is taking significant steps to curtail the export of certain semiconductor technologies to China, aiming to close regulatory loopholes identified last year. In an effort to strengthen existing export controls introduced in October 2022, the U.S. Commerce Department recently unveiled updated rules to reinforce these measures, with a particular focus on enhancing national security by restricting access to critical technologies. The Commerce Secretary, Gina Raimondo, stated that these updated rules will further enhance their effectiveness and prevent any attempts to evade the established restrictions.

Among the affected technologies are advanced artificial intelligence (AI) chips, which include products such as Nvidia’s H800 and A800. These rules extend export limitations not only to mainland China and Macao but also to 21 other countries subject to arms embargoes, including Iran and Russia. These regulations have already had an impact on major American chip manufacturers and are set to take effect in 30 days.

The initial set of rules from last year aimed to hinder China’s ability to acquire advanced computing chips and develop advanced weaponry. However, these rules required updates due to evolving technology, and the recent changes aim to target China’s military advancements more effectively. While the Biden administration is focused on slowing China’s military progress, they have intentionally excluded chips used in consumer electronics like phones, video games, and electric vehicles from the new restrictions.

Although the administration’s exclusions may have been intended to mitigate concerns, Beijing remains skeptical. China has been striving to assert itself as a tech superpower by “winning the battle” in core technologies. Their response to the new rules was critical, with the Foreign Ministry expressing the need for the U.S. to stop politicizing trade and tech issues. China intends to safeguard its rights and interests amid this evolving landscape, showing that the rivalry between the world’s two largest economies in the tech sector is heating up.

The ongoing tech rivalry has prompted the United States to seek support from its European and Asian allies in restricting the sale of advanced chipmaking equipment to China. In return, Beijing has imposed its export restrictions on germanium and gallium, both essential for semiconductor manufacturing, to counter these moves. Consequently, these actions have impacted major U.S. chipmakers, with shares of Nvidia falling by 4.7%, Intel slipping 1.4%, and AMD ending 1.2% lower.

Nvidia, for instance, anticipates that the new rules will affect its A800 chip, which was initially developed for Chinese customers as a way to bypass last year’s restrictions. However, the company believes that the additional restrictions will not significantly impact its financial results due to strong global demand for its products. The broader U.S. chipmaking industry is also evaluating the implications of these rules, with the Semiconductor Industry Association expressing concerns about overly broad, unilateral controls that could harm the industry without advancing national security.

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The European chipmaking sector is also reviewing the situation. ASML, a Dutch chipmaking equipment manufacturer, expects that the updated export restrictions will impact between 10% and 15% of its sales to China. Additionally, the U.S. Department of Commerce has recently added 13 Chinese entities to a list of firms with which U.S. companies are prohibited from conducting business due to national security concerns. Among these entities are two Chinese startups, Biren Technology and Moore Thread Intelligent Technology, along with their subsidiaries. The Department alleges that these companies are engaged in activities contrary to U.S. national security interests, specifically in the development of advanced computing chips.

These developments illustrate the ongoing and escalating tech battle between the U.S. and China, with both nations taking measures to protect their interests and assert dominance in the global tech landscape. It remains to be seen how these actions will impact the tech industry and the global supply chain. As the rivalry continues, the tech sector will likely see further challenges and disruptions in the coming months.

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