The United States has introduced new guidelines that could simultaneously benefit American chip manufacturers while stifling China’s tech ambitions.
A Potential Lifeline
The U.S. administration has offered a glimpse of hope to American tech giants like Nvidia, Intel, and AMD.
These companies might still be able to maintain profitable business ties with China, one of the world’s largest chip markets.
Impact on AI Chips
These new rules are aimed at limiting China’s access to high-end AI chips from the U.S.
These chips can be used for developing advanced technologies, and there’s a concern they might also be used for military applications.
Seeking Industry Input
U.S. officials are encouraging the semiconductor industry to provide ideas on how to safely continue selling AI chips to China, but only for smaller systems, not large-scale computing.
Striking a Balance
Thomas Krueger, a former U.S. official, stated that the idea is not to cut off chips for general consumer use in China but to focus on technologies that could be employed for military purposes.
A “Tamperproof” Way
The U.S. is interested in a secure method to prevent AI chips, even in bulk, from being used to create powerful supercomputers that could have military applications.
Shares of Nvidia dropped nearly 5% after the new regulations were unveiled, although the company, along with Intel and AMD, declined to comment on the matter.
Disrupting Chinese Startups
U.S. policy changes make it nearly impossible for Chinese startups like Moore Threads and Biren, which were founded by Nvidia veterans, to compete using advanced chip technology.
The Only Game in Town
With their Chinese competitors hamstrung, American companies like Nvidia may become the most attractive legal option for Chinese buyers in need of AI chips.
Investment bank Piper Sandler predicts Nvidia will adapt quickly to the new rules, minimizing disruptions to their business outlook.
Tightening Tool Rules
New regulations also target China’s ability to manufacture chips by restricting access to specialized equipment called immersion deep ultraviolet (DUV) lithography machines if they contain U.S. components.
TechInsights analyst Dan Hutcheson says the new rules are not only closing current loopholes but are also designed to prevent future workarounds by Chinese companies.
The rules reflect collaboration between the U.S., Japan, and the Netherlands.
These countries are key players in producing the advanced chipmaking equipment China seeks.
The new rules will likely affect China’s ability to manufacture advanced chips for years to come, affecting Chinese tech companies like Huawei, which recently used such technology in its new smartphone.
Keeping a Foothold
U.S. officials have narrowed their restrictions to specific types of equipment.
This allows U.S. companies to continue selling other types of older chipmaking equipment without violating the new rules.
What Lies Ahead
The new regulations could set the tone for future U.S.-China tech relations, potentially giving American companies an edge while hindering China’s tech ambitions.
American tech companies stand to benefit from these rules, but the larger impact will be felt in the battle for global technological dominance, where the U.S. and China are the major players.
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