The U.S. government is considering stricter export controls on advanced semiconductor technologies. This could include a ban on Nvidia’s AI chip designed for the Chinese market. Analysts at Jeffries say this move could significantly impact Nvidia’s China business.
Nvidia’s AI processor, developed to circumvent current export controls, is at risk of being prohibited under new U.S. regulations. The Biden administration is considering various ways to enforce this ban. They could do it through a specific product ban, lowering the computing power threshold, or imposing limits on memory capacity.
This potential ban is part of a broader effort by the U.S. to tighten semiconductor export controls to China. Previously, some U.S. companies like Intel and Qualcomm received special licenses to sell to certain Chinese entities, including Huawei. However, this leniency has done little to curb China’s access to advanced semiconductors.
Companies have sourced them indirectly from firms like Google and Microsoft.
U.S. eyes stricter Nvidia export controls
The U.S. government is also considering extending these export controls to other countries in the region, such as Malaysia, Indonesia, and Thailand.
There is also discussion about curbing exports to overseas Chinese companies, though this would be more challenging to implement. The Biden administration’s broader plan involves restricting key semiconductor manufacturing equipment from being sold to Chinese firms. Companies such as Japan’s Tokyo Electron and Dutch chip machine maker ASML could be potentially affected.
U.S. officials can invoke the Foreign Direct Product Rule (FDPR) to block sales of technologies that incorporate a certain percentage of U.S. intellectual property. While these moves have led to market speculation and reaction, analysts suggest that the FDPR’s application may have been misunderstood. Jeffries analysts noted that the most plausible scenario would involve imposing FDPR on more Chinese companies.
As a result, these companies would not be able to purchase semiconductor manufacturing equipment from companies like ASML and Tokyo Electron, even if Japanese and Dutch export restrictions do not explicitly ban such sales. The ongoing review of U.S. semiconductor export policies and these potential new restrictions underscore the escalating tech tensions between the U.S. and China. This has significant implications for the global semiconductor industry.
