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China center of Washington-chip giants' talks next week: Reuters

By Al Mayadeen English
Source: Reuters
15 Jul 2023 08:37
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American semiconductor producers are raising concerns over tighter US provisions on chip sales to China that will impact their revenues deeply.

Illustration of Chinese and US flag side by side and a motherboard in the background (ِAFP)

China will be on the table of discussion during a US trip next week by CEOs of tech giants Intel Corp and Qualcomm Inc as Washington piles up influence cards to crack down on Beijing's growing chip industry, Reuters reported on Saturday.

The executives will meet with top US officials to talk about export provisions, market conditions, and other issues affecting their firms, a source told the news site without mentioning with whom the meetings will be held. Other chip-making companies' chiefs will also be in Washington next week.

Further export restrictions on semiconductors are being considered by the United States, targeting Chinese 5G pioneer Huawei Technologies. Intel and Qualcomm will be among the firms affected by Washington's planned crackdown on companies doing business with China.

Intel is in the process of releasing a new artificial intelligence AI chip that could be sold to the Asian giant, while Qualcomm currently holds a special license to sell chips to Huawei.

US President Joe Biden's administration introduced strict limitations designed to cripple the exponential progress of China's semiconductor industry - that made significant leaps over its American competition - in attempts for the US to close the gap, after long years of neglecting its industrial complex and infrastructure opting for cheap foreign labor for production.

The US President's plan included the CHIPS and Science Act of 2022, a $280 billion industrial policy bill that will pour some $52 billion in subsidies for US semiconductor manufacturers given that they establish production plans on American ground.

Nvidia, a US firm that hit a trillion USD market cap last month after announcing AI breakthroughs in its chip production, will be among the companies to be affected by Washington's new bans on sales to China.

Chiefs of Intel and Qualcomm, Pat Gelsinger and Cristiano Amon respectively, maintained communications with government officials in the past few months to avoid any surprises.

But industry leaders have raised concerns repeatedly over Washington's growing hawkish policy on China. More prohibitions on doing business with Chinese firms will have a direct impact on the companies' profits, as China is considered today the largest chip consumer in the world.

A large number of US semiconductor firms collect over one-fifth of their revenue from China. Industry executives fear that the profit loss will strike their ability to reinvest in research and development R&D; an aspect to which Biden has given special attention to when announcing the CHIPS act.

According to the report, the executives aim through the Washington meetings to convey the actual risks of new restrictions.