The White House is considering tighter tech restrictions against China than it’s enacted before. New rules could place broad limitations on the shipment of chips used for developing artificial intelligence, in particular, according to Bloomberg. That comes on top of earlier action by the government. It told Nvidia Corp. and Advanced Micro Devices Inc. they’ll need permission to sell certain products to Chinese companies.
The recent actions are an escalation in U.S. policies aimed at curbing China’s efforts at tech independence. Previously, Washington concentrated its efforts on cutting off individual companies that it deemed bad actors—most notably Huawei Technologies, which has been deemed a national security threat. But more recently there’s been export restrictions of certain chip technologies to any company in China.
The mounting regulations, and the potential for more, have reached a large enough scale that U.S. companies will feel the impact, too, notes Bloomberg. Previously, escalating international tensions were only a vague concern for stateside silicon companies like Nvidia. Now, America’s most valuable publicly-traded semiconductor maker says the regulations on shipping its A100 and H100 chips could cause it to lose as much as $400 million of revenue this quarter. The announcement earlier this month caused a 12 percent drop in its stock.
Companies including Applied Materials Co., the California-based manufacturer of chipmaking machinery, and its peers have also faced tough questions from analysts and investors this earnings season about government scrutiny and new restrictions on their China businesses. Device makers have faced queries, too. This month, Broadcom Inc.’s Chief Executive Officer Hock Tan told an audience that about 13 percent of the company’s chip revenue is related to China.
The Chinese chip market is large, and critically important to sellers. Worldwide, China accounted for about $212 billion of the $582 billion in chips sold last year, according to research firm IDC. The next largest region was the rest of Asia Pacific combined, with $150 billion, followed by the Americas with $108 billion.
In general, U.S. companies have supported Washington’s actions against China. In the past, they’ve accused Chinese companies of having little respect for their intellectual property. And when the U.S. moved against Huawei, while some companies lost out on sales, others likely rejoiced in the hobbling of a competitor—Huawei’s in-house chip unit HiSilicon. But now, with billions of dollars at stake over tighter rules, chip companies may be rethinking their enthusiasm for D.C. intervention, notes Bloomberg.
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