Export restrictions bring global business challenges, and the three American chip giants lobby behind Washington: industry downturn chip | US | industry
Faced with the US government's continuous tightening of semiconductor industry policies towards China, the three American chip giants Intel, Qualcomm, and Nvidia have chosen to take the initiative.
According to multiple foreign media reports, on July 17th, the CEOs of the three major chip giants in the United States - Intel Pat Kissinger, Nvidia Huang Renxun, and Qualcomm Christiano Amon - told Biden administration officials during a meeting in Washington that the US government should study the impact of tightening export restrictions on China and suspend relevant measures before implementing new restrictions. The three CEOs warned that implementing relevant export control measures may damage the US leadership position in the industry.
The semiconductor industry is still in a low period, and TSMC warned at its latest Q2 performance meeting that the overall trend in the semiconductor industry is weaker than expected. However, the US government has been continuously tightening its policies towards China's semiconductor industry. There are reports that the US government may impose new restrictions on China's chip industry. The lobbying by the CEOs of the three giants in Washington also indicates that the continuous decoupling and chain breaking in the US pose great challenges for these companies to operate in China and even globally.
Three giants: Restricting China will damage the leading position of the US industry
Foreign media quoted insiders as saying that during the talks on the same day, Kissinger told Sullivan, Assistant to the President for National Security Affairs, Secretary of State Antony Blinken and other officials that further limiting Intel's business in China would endanger Biden's key policy of "bringing chip production back to the United States".
Kissinger also stated that without orders from Chinese customers, the necessity of Intel's plans to build factories and other projects in Ohio would be greatly reduced. Nvidia CEO Huang Renxun stated that restricting the company's chip sales in China will only make alternative products more popular.
According to insiders, officials from the Biden administration listened to the briefing but did not make any promises. Other government officials involved in the chip giant talks include US Commerce Secretary Raymond, National Economic Conference Director Brenner, and White House National Security Advisor Sullivan.
Matthew Miller, spokesman of the US State Department, said at the press conference that Antony Blinken sought to "share his views on the industry and supply chain issues, especially after his recent visit to China", and "directly listen to these companies' views on supply chain issues, and how they view business in China".
Reuters believes that as the Biden administration considers implementing a new round of chip export restrictions on China, the chip industry is eager to protect its profits in China. According to data from the Semiconductor Industry Association of America, China's semiconductor procurement volume last year was $180 billion, accounting for more than one-third of the global total of $555.9 billion, making it the largest single market.
The call for the Biden administration to reconsider its semiconductor policy towards China is not only for companies, but also for the American Semiconductor Industry Association.
On July 17th local time, the Semiconductor Industry Association of America issued a statement on its official website regarding possible additional restrictions imposed by the US government on semiconductors. SIA stated in a statement that the White House's repeated adoption of overly broad, vague, and sometimes unilateral restrictive measures may weaken the competitiveness of the US semiconductor industry, disrupt the supply chain, and trigger significant market uncertainty. The SIA urges the White House to engage more extensively with industry and experts to refrain from implementing further restrictive measures until the impact of current and potential measures is evaluated, in order to determine whether they are narrow and clearly defined, whether they are uniformly applicable, and whether they are fully coordinated with allies.
The Semiconductor Industry Association of America emphasizes that repeatedly adopting overly broad, ambiguous, and sometimes unilateral restrictive measures may weaken the competitiveness of the US semiconductor industry, disrupt the supply chain, and cause significant market uncertainty.
According to Bloomberg, representatives from the three chip companies mentioned above and speakers for the White House National Security Council both declined to comment. However, Bloomberg reported that on the 20th, Sullivan stated at the Aspen Security Forum that he agrees with executives that a "small yard, high fence" approach is needed. He also defended the US government's restrictive measures, claiming that they were targeted and had little impact on most US China trade related to the chip industry. Sullivan also hinted that the US may introduce more restrictive measures, but a decision can only be made after discussions with affected companies.
The decoupling and chain breaking of Meiwan have also suppressed their own enterprises
The US's play of decoupling and chain breaking has caused certain negative impacts on US funded enterprises. As the world's largest semiconductor market, both Intel, Nvidia, and Qualcomm have a huge business volume in China.
Nvidia's CFO, Colette Kress, stated at an investment conference at the end of June that US restrictions on the export of artificial intelligence chips to China "will permanently deprive the US industry of opportunities.". Huang Renxun previously stated in an interview that the Chinese market is irreplaceable and exiting the Chinese market is not a feasible option.
Qualcomm's main mobile phone customers are all located in China, which is also Qualcomm's largest global market, accounting for up to 60%. Intel's business volume in China has exceeded 20%.
China filed a lawsuit with the World Trade Organization in December last year against the export control measures imposed by the United States on Chinese chips and other products. The Chinese Ministry of Commerce stated that in recent years, the United States has continuously generalized the concept of national security, abused export control measures, hindered normal international trade of products such as chips, threatened the stability of global industrial and supply chains, disrupted the international economic and trade order, violated international economic and trade rules, violated basic economic laws, and harmed global peace and development interests, which is a typical practice of trade protectionism.
On July 18th, the Ministry of Foreign Affairs held a regular press conference. A foreign media reporter asked, and according to sources, the Biden administration may introduce a series of restrictions on investment in China's cutting-edge technology at the end of August, stating that these policies may prohibit new investment in fields such as semiconductors, quantum computing, and artificial intelligence, but do not involve the biotechnology and energy industries. May I ask if the Chinese side has any comments on this?
Mao Ning stated that China has always opposed the politicization and weaponization of economic, trade and technological issues by the United States. We believe that the practice of artificially setting obstacles to normal technological cooperation and economic and trade exchanges violates the principles of a market economy, disrupts global supply chain stability, and is not in the interest of either party. "We hope that the US side will implement President Biden's promise of no intention of decoupling from China, obstructing China's economic development, or containment of China, and create a favorable environment for Sino US economic and trade cooperation."
On July 19th, the China Semiconductor Industry Association issued a statement stating that recently, the association noticed widespread media coverage of leaders of some American chip companies attempting to lobby the US government to reduce trade restrictions and promote global cooperation. The Semiconductor Industry Association of America has also issued a statement regarding potential additional restrictions on the semiconductor industry by the US government. This reflects the concerns of the US semiconductor industry about the actions of the US government. The China Semiconductor Industry Association firmly believes that once the globalization of the semiconductor industry, which has developed for decades, is disrupted, it will inevitably have a serious negative impact on the global economy. It will not only lead to the fragmentation of the semiconductor global supply chain, but also disrupt the unity of the global market, thereby cutting off the prosperity of the global economy.
The United States not only imposes restrictions on its own companies exporting Chinese semiconductors, but also demands similar restrictions from countries such as the Netherlands and Japan.
On June 30th, a reporter asked if the US and Dutch governments are planning to implement legislation to further restrict the sale of chip manufacturing equipment to China. What is China's comment on this? Spokesperson of the Ministry of Foreign Affairs, Mao Ning, stated at a press conference that China has always opposed the United States' generalization of national security concepts, abuse of export controls, and use various excuses to persuade and coerce other countries to implement a technology blockade against China. Intervention in normal economic and trade exchanges between enterprises through administrative means seriously undermines market rules and international economic and trade order, impacts global industrial and supply chain stability, and is not in the interest of any party. China will closely monitor relevant trends and resolutely safeguard its legitimate rights and interests.
On July 23rd, at a regular press conference of the Ministry of Foreign Affairs, a reporter asked if Japan's export control measures for semiconductor manufacturing equipment have officially come into effect. What is China's comment on this? Mao Ning stated that despite China's serious concerns, the Japanese side insists on introducing and implementing export control measures with clear targeting towards China. China deeply regrets and is dissatisfied, and has made solemn representations to the Japanese side at different levels.
Mao Ning also mentioned that in recent years, some countries have politicized and securitized economic and trade issues, including abusing export control measures and frequently using administrative means to forcefully promote the decoupling and disconnection of high-tech fields. These erroneous practices violate the laws of market economy, free trade principles, and international economic and trade rules, not only causing losses to relevant enterprises, but also affecting the security and stability of the semiconductor industry and supply chain in the region and even globally.
