US semiconductor giants warn Biden admin against sanctioning China
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Qualcomm, Nvidia, and Intel are cautioning the Biden administration against further restrictions on China's semiconductor industry citing imminent backfire.
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A sign sits atop the Qualcomm headquarters building in San Diego on Wednesday, Jan. 27, 2016. (AP)
Leading semiconductor companies in the United States, including Qualcomm, Nvidia, and Intel have called on the Biden administration to restrict China's access to high-end microchips: arguing that such measures could backfire, inflicting significant harm on the US economy.
Representatives from Nvidia, Intel, and Qualcomm have held meetings with key officials in the Biden administration, including Secretary of State Antony J. Blinken and Commerce Secretary Gina M. Raimondo. These meetings aimed to persuade the administration to reconsider imposing additional restrictions on China, which has become a crucial market for American semiconductor companies.
Read more: US driving Chinese scientists away amid tensions with China: FP
China currently accounts for nearly a third of the global semiconductor market and contributes over $50 billion in combined annual revenue for Intel, Nvidia, and Qualcomm. The executives of these companies have emphasized that a loss of revenue of this magnitude could lead to layoffs, reduced investments in technology development, and diminished economic growth, particularly in semiconductor hubs located in Ohio, New York, and Arizona.
Furthermore, the representatives raised concerns that the US government's actions may inadvertently accelerate China's efforts to establish its independent chip industry, potentially resulting in Chinese-made chips dominating the global market.
Read more: US losing to China in semiconductor race: Expert
Tim Teter, Nvidia's general counsel, cautioned, "What you risk is spurring the development of an ecosystem that’s led by competitors… And that can have a very negative effect on the US leadership in semiconductors, advanced technology, and AI."
The lobbying efforts of these semiconductor giants have yielded some results. Reports suggest that the Biden administration has delayed the implementation of new chip restrictions and is now considering a "narrowed list" of potential changes. This shift reflects the industry's concerns regarding the potential consequences of overly restrictive policies.
The ongoing semiconductor trade dispute between the US and China began over a year ago when the US Commerce Department implemented restrictions on the supply of advanced chips and chip-making equipment to China. The Biden administration has continued these efforts, citing national security concerns and aiming to limit China's technological progress.
Read more: US-China relations hanging by the thread of chips: NYT
In response to these restrictions, American semiconductor companies have had to adjust their businesses. For example, Nvidia introduced a modified version of its AI chip, the H100, specifically designed for the Chinese market, with performance power adjusted to comply with US restrictions.
However, the semiconductor industry has expressed concerns about the broad and unilateral nature of the restrictions. They argue that these measures could damage the industry's competitiveness and have far-reaching economic consequences.
Patrick Gelsinger, CEO of Intel, stated "Right now, China represents 25 percent to 30 percent of semiconductor exports. If I have 25 percent to 30 percent less market, I need to build fewer factories... This is strategic to our future; we have to keep funding the (R&D), the manufacturing, etc..."
China has responded to the US restrictions by imposing sanctions on US semiconductor giant Micron Technology and implementing export restrictions on rare earth materials essential for chip production. These actions have raised concerns about disruptions in the global supply chain for electronic chip-making.
Read more: US pressures allies into containing China Chips industry: Global Times
Chinese Commerce Ministry spokesman He Yadong has warned, "The US measures to restrict chip exports to China violate market rules and lead to fragmentation in the global semiconductors market...significantly affecting the interests of semiconductors manufacturers throughout the world, including in the US."
In response to these challenges, China is reportedly taking steps to bolster its semiconductor industry, potentially setting the stage for intensified competition in the global chip market.
