[Global Times comprehensive report] “the US approach is a typical ‘science and technology hegemony’.” Regarding the US government’s request that the two US chip design companies stop exporting top-level computing chips to China, Chinese Foreign Ministry spokesman Wang Wenbin said on September 1 that “China firmly opposes this.”. The stock prices of NVIDIA and AMD, which were directly affected by the new US restrictions, fell in response. On August 31, they fell by 6.6% and 3.7% respectively. NVIDIA said that its potential sales of $400 million in this quarter may evaporate. Now, the operation of American chip manufacturers is in a difficult period. As Shu jueting, spokesman of the Ministry of Commerce of China, said, the US approach will also seriously affect the interests of us enterprises. For some time, the United States has successively introduced measures to suppress the development of China’s chip industry. For the latest restrictive measures, Reuters believes that it “marks a major upgrade of the United States’ attack on China’s technological capacity”. A domestic analyst interviewed by the global times on the 1st said that on the one hand, we need to be vigilant that the United States will continue to strike a “combined punch” against China’s semiconductor industry, but on the other hand, the US export ban is also an opportunity to promote the further development of the domestic chip industry chain, which has insufficient interaction between upstream and downstream.
NVIDIA was hit hard and said it was communicating with Chinese customers
According to the CNBC website of the United States reported on September 1, in a document submitted to the US Securities and Exchange Commission (SEC), NVIDIA said that it received a new permission request from the US government on August 26 for the future export of chips to China (including Hong Kong). This measure is said to solve the risk of related products being used or diverted for China’s “military end use” or “military end-user”.
On August 31, the New York Times quoted NVIDIA as saying that the new measures will affect the company’s existing product A100 and the product H100 expected to be launched later this year. NVIDIA believes that the regulations of the US government may damage its ability to complete the development of H100 in time or support the existing customers of A100. It is reported that this restriction is also applicable to Russia, but NVIDIA does not sell products to Russia at present.
A spokesperson for AMD told Reuters that the company has also received a new permission request from the government, which will lead it to stop selling mi250 artificial intelligence chips to China. Amd believes that the mi100 chip should not be affected.
Reuters said that the US Department of Commerce would not disclose what new standards it had set for the export of AI chips to China, but claimed that the Department was reviewing China related policies and practices to prevent “advanced technologies from falling into the hands of inappropriate people”.
With regard to the new measures taken by the United States, Chinese Foreign Ministry spokesman Wang Wenbin said on September 1 that the United States politicized, instrumentalized and weaponized science, technology and economic and trade issues, engaged in “technical blockade” and “technology decoupling”, vainly attempted to monopolize the world’s advanced science and technology, safeguard its own scientific and technological hegemony, and undermine the global industrial chain and supply chain of close cooperation, which is doomed to failure.
“The US side should immediately stop its erroneous practices, treat enterprises of all countries fairly, including Chinese enterprises, and do more to benefit world economic stability.” On the same day, Shu jueting, spokesman of the Ministry of Commerce of China, also responded to this matter.
As Shu jueting said, the US approach will not only damage the legitimate rights and interests of Chinese enterprises, but will also seriously affect the interests of American enterprises. The Wall Street Journal said on September 1 that NVIDIA is the most valuable chip manufacturer in the United States, and it dominates the market in the field of artificial intelligence chips. However, the introduction of the new regulation in Washington comes at a difficult time for chip manufacturers. Due to serious inflation and deteriorating economic prospects, people’s consumption ability has been restrained, and the demand for computers, video games, smartphones and other electronic devices has slowed down.
NVIDIA said in a statement that it is communicating with Chinese customers so that they can use the company’s alternative products to meet their planned or future purchase needs. The company plans to apply to the US government for relevant export exemptions, but there is “no guarantee” that it will be approved. CNBC said that if Chinese enterprises decide not to buy the alternative products provided by NVIDIA, the latter will lose $400 million in sales in this quarter. NVIDIA last week predicted that sales in the third quarter of this year would plummet by 17% year-on-year to $5.9 billion. According to the financial report released by the company, its total revenue in the previous fiscal year was 26.91 billion US dollars, and its revenue in China (including Hong Kong) was 7.11 billion US dollars, accounting for 26.4%.
According to the Wall Street Journal, NVIDIA believes that even if the US government approves the export exemption, competitors may benefit from it, such as semiconductor suppliers from China, Israel and European countries, because “the licensing process will make our sales and support work more complicated and uncertain, and encourage Chinese customers to find alternatives”. Amd believes that the new regulations will not have a significant impact on its business.
This new move by Washington has also attracted the attention of the media on the island. NVIDIA and AMD are TSMC’s top 10 customers, accounting for about 10% of its revenue. If their chip shipments decrease, it will also affect TSMC’s performance, Taiwan’s Zhongshi News reported on the 1st. According to the report, affected by the decline of US stocks and the sudden introduction of restrictions on the export of artificial intelligence high-end chips in the United States, Taiwan stocks opened low and fell on the 1st. At the close, they “fell” by nearly 300 points, and TSMC’s share price fell below NT $500 in early trading.
Setting a “performance threshold” for chips exported to China?
An industry manager interviewed by the Wall Street Journal analyzed that the ban not only affects NVIDIA and AMD, but also sets a “performance threshold” for other high-end chips dealing with artificial intelligence computing to be exported to China. In the view of Reuters, the new chip export restrictions “mark a major upgrade of the US attack on China’s technological capability”.
The New York Times believes that the new measures against China and Russia are the latest attempt by the US government to use semiconductors as a tool to hinder competitors from making progress in high-performance computers, artificial intelligence and other fields. The export ban is part of the efforts of the United States and China to compete for the leading position of advanced technology.
It is reported that A100, H100 and mi250 chips are all GPU (graphics processor) products. In the professional field, GPU is an important source of computing power in the fields of data centers, high-performance computers and artificial intelligence. Reuters said that if the high-end chips of American enterprises such as NVIDIA and AMD are not available, the ability of Chinese enterprises to perform high-order operations such as image and voice recognition will be weakened. Image recognition and natural language processing are common in smart phone applications, such as answering user inquiries and marking photos. These functions also have military applications, such as searching satellite images containing weapons or military bases, and filtering digital communication content for intelligence collection.
It is also an opportunity for China
According to the Wall Street Journal, it has become commonplace for the United States to impose restrictions on trade with China and on the export of chips. In mid August, the United States announced export control on four technologies, including EDA software tools. The 2022 chip and Science Act signed by US President Biden on August 9 stipulates that enterprises receiving federal subsidies cannot significantly increase the production of “advanced process” chips in China (generally considered to refer to chips below 28nm). In addition, American media disclosed at the end of July that two chip equipment companies in the United States confirmed that Washington asked them not to supply equipment for manufacturing chips of 14 nm and below to China.
Gu Wenjun, chief analyst of SMIC consulting, told the global times on the 1st that by introducing a series of restrictive measures, the United States intends to suppress the development of China’s high-end links in the field of science and technology. Initially, it sanctioned Huawei and ZTE in the terminal part, and later targeted Hisilicon in the field of chip design and SMIC in the field of chip manufacturing. Gu Wenjun said that in the short term, the United States hopes to “decouple” and “break the chain” China in the high-tech part of chips. In the medium to long term, the United States hopes that it and its allies will no longer rely too much on China’s market and reduce the exchange of production factors with China.
“US chip restrictions cannot stop the progress of China’s semiconductor industry.” Russia’s satellite news agency quoted scholars as saying that in the current semiconductor industry, including China, the 28nm process technology is still the basis for many manufacturers to maintain profits and participate in the research and development of advanced semiconductor technology. The most advanced chip technology is indeed very useful, but it still accounts for a low proportion of the whole semiconductor industry. As for whether the US restrictive measures will have a long-term impact on China, it depends on the development of the manufacturing and design of the latter’s semiconductor industry. In 10 to 20 years, the development of the industry should change and new technologies may appear.
“From another perspective, the export ban of the United States is also an opportunity for the domestic chip industry. Previously, there was insufficient interaction between upstream and downstream enterprises in the domestic chip industry chain, but in the future, we will further strengthen domestic substitution.” Han Xiaomin, general manager of Jiwei consulting, told the global times that domestic industry chain enterprises should base themselves on the domestic market, gradually establish a complete chip industry chain ecosystem, and improve the industry’s anti risk ability, competitiveness and global influence.
Post time: Sep-02-2022