New US export controls could mark the start of a trade war

New US export controls could mark the start of a trade war

Analysis Nvidia thinks it won’t be affected by the latest US controls on the technology, if only because it’s already subject to similar restrictions. However, the effects on Chinese companies could be dramatic amid fears of a protracted trade war.

The sweeping new measures covering technology exports to China announced on Friday appear to be the most extensive yet, representing a further escalation in US efforts to contain China’s growing semiconductor and computing capabilities.

Inevitably, these moves have angered the Chinese government, which has responded by accusing the United States of unfairly targeting its tech industries in an effort to stifle competition. Others went further and argued that the new measures mean the US and China are now officially embroiled in an economic war that will impact global trade.

According to Bloomberg, shares of semiconductor companies fell after the news, which affected companies around the world. These included American companies such as Nvidia, Netherlands-based ASML, a leading supplier of chip manufacturing equipment, as well as Chinese companies such as chipmaker Semiconductor Manufacturing International Corporation (minimum wage).

Nvidia, however, said it does not expect the new export control rules to have a significant impact on its business, despite the fact that some of them explicitly target chips and technology for the ‘AI and high-performance computing (HPC), where many of Nvidia’s GPU products sit.

The company told Reuters it had already been subject to rules that could affect $400 million of its China sales for its current fiscal quarter. These rules, which were announced in early September, effectively banned AMD and Nvidia from selling certain key products to China, including Nvidia’s A100 Tensor Core GPU and the upcoming H100, which may mean that any negative impact has already been taken into account for these two sellers.

The latest US export controls have blocked all AI and HPC chips from being shipped to China without an export license, which will likely be very difficult to obtain, as well as sales of equipment that could be used to manufacture such products.

Additionally, they also put a block on equipment that could be used to manufacture logic chips with a 16nm production process or anything more advanced, as well as 18nm or more advanced DRAM, and NAND flash with over 128 layers.

Who is down with HPC? well you know me

The U.S. government has also expanded its Unverified List, which contains companies that are not allowed to import U.S. technology, and would have made it easier for organizations on that list to migrate to the tougher Entity List.

Indeed, the United States is trying to prevent Chinese companies from not only having access to the latest high-performance chips and technologies, but also from having the capacity to manufacture comparable technology themselves – at least until that they can develop the native means to do so, and that could be a long and slow process.

According to the FT, these new measures are similar to the sanctions the US has rolled out against Huawei in the previous two or three years, meaning the US government is using what it has learned in a broader attack on Huawei. Chinese technology industry.

The effect on Huawei has been dramatic, with the CEO reportedly putting the organization into survival mode a few months ago, blaming US sanctions as well as worsening economic conditions for the company’s woes.

Huawei has been looking for alternative sources of chips, and it is understood that a startup called Pengxin Micro Integrated Circuit Manufacturing Co has been set up in China by a former Huawei executive to meet this need. It’s unclear whether the new company will breach new US regulations, but it’s believed to be trying to secure chipmaking equipment from overseas suppliers to enable it to start production in 2025.

However, even before the latest measures were announced, some voices have warned that US sanctions will likely hurt other markets, including US companies. Fortune magazine said the loss of access to the Chinese market would hurt US semiconductor companies’ revenues, potentially hampering their ability to fund research and development of future technologies.

Export controls could also lead China to impose its own sanctions on US semiconductor companies, which could lead to a broader trade war that could affect the entire global economy, while inciting simply China to devote resources to developing its own advanced semiconductor manufacturing processes. over which the United States will have no control. ®

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