Further restrictions on exports to China will backfire on itself. [Perspective] US Media: Chip Manufacturers Warn Correctly Intel | Market | Export

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China Daily, July 25th (Xinhua) -- Recently, Bloomberg reported that on July 17th local time, executives from American chip companies including Intel, Qualcomm, and Nvidia called on the Biden administration to stop and emphasize the importance of the Chinese market.

The article points out that these executives are correct in warning the Biden administration to cut off China's access to chips.

The Biden administration's semiconductor strategy revolves around two closely intertwined goals. The first goal is to weaken China's ability to acquire the semiconductors needed for military modernization. The second goal is reflected in the Chip and Science Act he signed into effect last year, which aims to reduce the United States' dependence on East Asian supply chains by encouraging companies to research and manufacture chips in the United States.

The article states that the CEOs of Intel, Qualcomm, and Nvidia have been warning the Biden administration not to adopt high-pressure policies towards the first target. They are concerned that while reducing China's access to cutting-edge technology channels, implementing new restrictions on the export of less advanced chips from China will result in them losing a significant source of income.

China is the world's largest commercial semiconductor market. For Nvidia, China provides approximately one-fifth of its revenue. The company's stock price has surged 220% this year, partly due to a surge in demand for high-end chips used in artificial intelligence systems, and partly due to expectations of continuing to enter the Chinese market. About 60% of Qualcomm's revenue comes from supplying components to China, where most of the world's consumer electronics products are produced. Intel regards China as its most important sales region, with Chinese market sales accounting for 1/4 of its total sales.

Whether the warnings from chip manufacturers will be taken seriously will only become clear after the Biden administration provides more details on further semiconductor restrictions, which are expected to be officially confirmed in the coming weeks.

According to the American Chamber of Commerce, if they face the worst-case scenario of completely stopping sales to China, American chip companies will lose $83 billion annually and 124000 jobs. Research and development expenses will decrease by $12 billion annually.

According to a report on the website of The Wall Street Journal, on the 17th, the Semiconductor Industry Association, an industry organization based in Washington D.C., stated in a written statement that allowing the US chip industry to continue entering the Chinese market is crucial to avoid weakening the positive impact of US funding for domestic chip manufacturing. China is the largest commercial market for mature process semiconductors.

American chip companies have long believed that the government should carefully weigh the impact of export restrictions, as sales in China support investment in the United States and help fund research to maintain technological advantages. The Semiconductor Industry Association stated that these restrictions are too broad, ambiguous, and sometimes unilateral, which may weaken the competitiveness of the US semiconductor industry, disrupt the supply chain, and cause significant market uncertainty. The association calls on the Biden administration to consult with the industry before implementing more restrictions.

After the semiconductor tensions between the United States and China intensified, several chip companies, including AI chip leader Nvidia, have been lobbying the Biden administration not to implement stricter export controls. The Biden administration is currently considering further restrictive measures, which will constrain Nvidia's development of AI chips for the Chinese market. Nvidia's CFO has warned that if AI chips are banned, the US chip industry will permanently lose business opportunities in the Chinese market.

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