In a recent development, the Biden administration has made significant updates to export control regulations for artificial intelligence (AI) chips. The primary objective behind these changes is to prevent companies, including industry giants like NVIDIA, from exporting advanced AI chips to China. This move has sent ripples across the tech industry and is set to reshape the dynamics of the global chip market.
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The New Regulations Unveiled
As of October 17th, the new export control regulations have been unveiled, signaling a significant shift in the landscape of chip exports to China. These regulations are set to impact not only NVIDIA but also other prominent chip manufacturers like AMD and Intel. Additionally, chip equipment manufacturers such as Applied Materials, Lam Research, and KLA are not exempt from these sweeping changes.
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NVIDIA’s Response
In response to these new regulations, NVIDIA released a statement affirming its commitment to compliance with all applicable regulations. The company emphasized its dedication to providing a diverse range of application products that support various industries. They further stated that, given the global demand for their products, they do not anticipate these regulations having a substantial impact on their financial performance in the short term.
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ASML’s Take on the Situation
Dutch lithography giant ASML also weighed in on the issue. In a public declaration, they expressed the need to carefully assess the potential impact of these regulations on their business. According to the information available to them, ASML believes that the number of mainland Chinese wafer fabs affected by the new rules related to advanced chip manufacturing is limited. While acknowledging potential challenges in the medium to long term, ASML does not expect these measures to significantly impact their financial situation in 2023. The company’s long-term outlook for 2025 and 2030, as announced on their Investor Day in November 2022, remains optimistic. ASML is actively seeking further clarification from the U.S. government on the scope of these new regulations.
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The Focus on Chiplet Stacking Technology
These new U.S. export control regulations are not limited to chip exports but also extend to the prevention of companies bypassing chip restrictions through the use of chiplet stacking technology. The measures aim to tighten control over advanced AI chip exports, reflecting a concerted effort to safeguard technology with national security implications.
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The Stance of U.S. Commerce Secretary Gina Raimondo
U.S. Commerce Secretary Gina Raimondo has been vocal about the rationale behind these measures. She states that they are intended to “plug loopholes” and that they may be updated at least annually in the future. Raimondo emphasizes that these new restrictions will only affect a small portion of chip exports to China. Importantly, chips used in consumer products such as gaming consoles or smartphones will not be subject to export controls.
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The Impact on AI Chip Exports
According to Reuters, the new restrictions will prevent the export of some AI chips that meet current technical specifications to China. NVIDIA had previously introduced the H800 chip for the Chinese market as a replacement for the banned H100 model AI chip, which is now one of the primary targets of these regulations. The U.S. is also planning to replace the “bandwidth parameters” used to restrict the export of AI chips with other standards, thereby expanding the scope of these restrictions.
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Market Reactions
The unveiling of these new regulations has already had a notable impact on the stock prices of key players in the tech industry. On October 17th, NVIDIA’s stock price fell nearly 7%, while AMD and Intel saw declines of over 2% and 1.7%, respectively. These reactions indicate the significance and far-reaching consequences of these regulatory changes.
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Preparedness in the Industry
According to First Financial, many domestic manufacturers in China had received advance notice of these changes and had already stockpiled goods. Tech giants like Tencent and Baidu also stated that they have ample stock. This proactive response from the industry underscores the anticipation of such measures and their potential implications.
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International Diplomatic Response
On October 16th, during a routine press conference, Hua Chunying, the Foreign Ministry spokesperson, addressed a question regarding the Biden administration’s expected further measures to restrict chip exports to China. She emphasized China’s position on U.S. export controls on Chinese chips, urging the U.S. to avoid politicizing economic and technological issues. The message was clear: China intends to closely monitor developments and protect its own rights and interests.
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ASML CEO’s Perspective
ASML’s CEO, Peter Wennink, also shared his perspective on these measures in an interview with foreign media. He cautioned against attempts to isolate China through technology migration and export controls. Wennink argued that such actions may ultimately weaken the West, given China’s vast population and innovative potential. He highlighted that by restricting China, the U.S. may inadvertently encourage China to become more innovative in developing its own technology.
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The Potential for Accelerated Chinese Chip Industry
The New York Times has reported that U.S. chip companies have been warning that these restrictions could accelerate China’s development of an independent and autonomous chip industry. This acceleration could ultimately pave the way for Chinese-made chips to dominate the global market. It’s a scenario that underscores the intricate balance of power in the tech industry and the ripple effects of these export control regulations.
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The Views of Key Industry Players
NVIDIA’s Chief Financial Officer Colette Kress has underscored the potentially permanent consequences of these restrictions on the U.S. tech industry. According to Kress, these measures will deprive the U.S. industry of crucial opportunities. NVIDIA’s CEO Jensen Huang has also stressed the irreplaceable nature of the Chinese market, emphasizing that withdrawing from it is not a viable option.
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Companies on the Entity List
In a related development, the U.S. Commerce Department announced that Biren Technology and MooreThread had been placed on the Entity List. Both companies have expressed strong opposition to this decision. Biren Technology has issued a statement, vehemently opposing its inclusion on the Entity List. The company is actively appealing to relevant U.S. government departments and calling for a reexamination of the decision. They emphasize their commitment to legal and compliant operations and are assessing the impact of the incident on their company.
MooreThread, too, strongly protested its inclusion on the Entity List, citing its adherence to laws and regulations and its commitment to a legal and compliant corporate culture. The company is actively communicating with various parties and assessing the impact of this matter.
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In Conclusion
The new U.S. export control regulations for AI chips represent a pivotal moment in the tech industry. These measures are set to reshape the landscape of chip exports to China, impacting major players and sparking international diplomatic responses. As industry leaders express their views and concerns, it’s clear that the repercussions of these regulations will be felt far and wide. The tech world is now bracing for the potential acceleration of China’s chip industry, which may have profound implications for the global tech market in the years to come.
