We can't lose the Chinese market. We need to give policy guarantees. The three chip giants of the United States meet with Antony Blinken in the Chinese market | Meet with senior officials of the Biden government | The three chip giants of the United States

Faced with the possibility of further tightening restrictions on chip exports to China, the US chip industry is joining forces to launch an offensive against the Biden administration.

According to Reuters, on July 17 local time, executives of American chip giants gathered in Washington to meet with US Secretary of State Antony Blinken and other senior officials of Biden's government to discuss restrictions on semiconductor exports to China.

On the same day, the most influential semiconductor lobbying group in the United States, the Semiconductor Industry Association, urged the government to stop implementing more restrictions on chip exports to China.

The public opinion believes that the US chip industry, from chip giants to industry associations, is taking a joint action in the hope of making final efforts during the window of slowing US China relations before the Biden administration upgrades its restrictions, in order to prevent the Biden administration from continuing to take a step towards "backlash against the United States.".

Joint action

According to the US State Department and informed sources, CEOs of US chip companies such as Intel, Qualcomm, and Nvidia attended Monday's meeting. Senior government officials attending the talks include Secretary of State Antony Blinken, Secretary of Commerce Raymond, Director of the National Economic Commission of the White House Brenner, Assistant to the President for National Security Affairs Sullivan, etc.

US State Department spokesperson Matthew Miller confirmed this news at a press conference.

Miller said that Antony Blinken tried to share his views on the chip industry and supply chain issues, especially after his recent visit to China. Antony Blinken also directly listened to the opinions of these companies on supply chain issues and business in China.

The spokesman of the US Department of Commerce said that Antony Blinken also discussed China's recent restrictions on the export of gallium, germanium and other raw materials for chip manufacturing in the meeting with the CEO of the chip company.

Insiders added that Biden administration officials are also concerned about China's acquisition of the most advanced artificial intelligence chips.

During the discussion, chip company executives made several demands, including accelerating the payment of government funds allocated for semiconductor companies under the Chip and Science Act, to ensure that government policies do not exclude chip companies from the lucrative Chinese market.

According to Bloomberg, insiders say that the three major chip giants oppose tightening export controls on chips and semiconductor manufacturing equipment to China.

On the same day, the Semiconductor Industry Association of America also issued a statement warning that restricting the sale of chips to China may backfire on the United States itself.

The most influential chip industry organization in the United States called on the Biden administration to avoid further restrictions on chip exports to China in a statement, stating that this move may harm a large amount of new investment in domestic chip manufacturing in the United States.

The statement pointed out that the restrictive measures taken by the White House are too broad, vague, and sometimes even unilateral, which may weaken the competitiveness of the US semiconductor industry, disrupt the supply chain, cause significant market uncertainty, and trigger China's continued escalation of retaliation.

SIA also urged the Biden administration to allow the US chip industry to continue entering the Chinese market. The statement emphasizes that China is the world's largest commercial semiconductor market.

imminent

In front of senior government officials and industry associations, company executives shouted loudly. In the eyes of public opinion, the US semiconductor industry is currently coordinating and taking intensive actions, perhaps realizing that a critical moment of "danger" and "opportunity" is coming.

The danger is clearly imminent.

The Biden administration is considering implementing a new round of restrictions on Chinese chip exports.

Last October, the US Department of Commerce issued a semiconductor ban, prohibiting semiconductor equipment manufacturers from selling certain devices to China and exporting some chips for artificial intelligence applications.

Currently, the Biden administration is planning to update this ban and upgrade semiconductor export restrictions to China. Including considering tightening exports of artificial intelligence chips to China - prohibiting US chip manufacturers from exporting chips to customers in China and other countries of interest without obtaining prior licenses; Restricting US investment in China's advanced process chip manufacturing and other technologies. Previously, it was reported that the new regulations may be launched as soon as the end of July.

The new regulations are imminent, and the chip industry is eager to protect its profits in China.

Reuters reported that Nvidia, Qualcomm, and Intel all rely on China for their key sales revenue.

For example, Qualcomm supplies components to Chinese smartphone manufacturers such as Xiaomi, and its Chinese market revenue accounts for over 60% of the company's total revenue. Qualcomm is also the only company authorized by US regulatory agencies to sell mobile chips to Huawei Technologies Limited.

Intel regards China as its most important sales region, with Chinese market sales accounting for a quarter of its total sales. Last week, Intel CEO Pat Kissinger also went to China to showcase his artificial intelligence chips.

For Nvidia, China contributes approximately 20% of the company's revenue. Currently, Nvidia is selling improved artificial intelligence chips to the Chinese market, and the tightening of export restrictions by the Biden administration will constrain this business.

According to data from the Semiconductor Industry Association of America, the semiconductor procurement volume in China last year was $180 billion, accounting for more than one-third of the global total of $555.9 billion. China is the largest single market.

According to the data released by the General Administration of Customs on July 13, the total imports of chips from Chinese Mainland fell by 22.4% to US $162.6 billion in the first half of this year.

Bloomberg reported that so far, the hardest hit have been US chip manufacturers and equipment manufacturers. These companies are also concerned that Washington's restrictions will expand to other types of chips.

If further restrictions are imposed on chip exports to China, American chip companies are not only concerned about a decrease in sales, but also about a corresponding reduction in funding for research and development.

In the view of American chip companies, sales in China support investment in the United States and help fund research to maintain technological advantages.

The three chip giants believe that cutting off ties with China, the largest market, will damage the ability of US companies to invest in technology development and ultimately weaken the US leadership position.

Opportunity Window

At a critical moment, the turning point seems to be accompanying us.

For a period of time, the Biden administration has hoped to stabilize relations with China and ease the long-standing tension through high-level exchanges. To this end, the Secretary of State, Finance Minister, and climate envoy were sent to visit China one after another.

The subtle changes in China US relations have shown the chip industry opportunities and hope to exert influence on the government.

The Wall Street Journal commented that the US chip industry is lobbying at a time when the Biden administration is trying to find new opportunities for diplomacy with the Chinese government.

Some sources have revealed that although chip giant executives do not expect to persuade the US government to abandon all restrictions, they are aware that a window of opportunity is emerging. They hope to make a final effort by lobbying White House officials not to exceed existing restrictions and making the Biden administration aware that further expansion of restrictions may temporarily curb China's development, but ultimately harm US interests. Moreover, once the situation escalates, it will undermine the current contacts between the United States and China, as well as diplomatic efforts to establish more effective bilateral relations.

Can the "last effort" of the US chip industry be effective? We will wait and see.