US Semiconductor Giants Express Concern Over China Tech Restrictions

According to a media report, these industry giants have warned that such measures could potentially harm their businesses and disrupt the Biden administration's plans for domestic semiconductor manufacturing.

In the midst of a trade dispute with China over semiconductors initiated by Washington last year, American semiconductor companies have issued a strong warning about the negative consequences of hastily implemented measures.

They argue that cutting sales to China could jeopardize the administration's ambitious goals of establishing new semiconductor factories within the United States. The report cites numerous industry interviews to support this perspective.

Nvidia, Intel, and Qualcomm, three prominent players in the chip-making industry, have reportedly engaged in discussions with key Biden administration officials, including Secretary of State Antony Blinken and Commerce Secretary Gina Raimondo. They have also met with representatives from various think-tanks to advocate for a reconsideration of additional chip restrictions targeting China.

China currently accounts for nearly one-third of the global semiconductor market, generating more than $50 billion in combined annual revenue for Intel, Nvidia, and Qualcomm. The CEOs of these companies have voiced concerns that revenue losses of this magnitude could lead to layoffs, reduced investments, and hindered technology development, affecting semiconductor hubs in Ohio, New York, and Arizona.

These industry leaders have cautioned that Washington's actions against Beijing could prompt China to accelerate the development of its own independent chip industry, potentially allowing Chinese-made chips to dominate the global market. Tim Teter, Nvidia's general counsel, stated, "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 reportedly yielded results, resulting in a delay in implementing new restrictions and a more limited list of potential changes that the Biden administration may consider.

Following last year's restrictions stemming from the CHIPS Act signed by President Biden, these American companies have had to adapt their business strategies. For example, Nvidia had to create a modified version of its AI chip, the H100, specifically tailored for China. To comply with US restrictions, the chip's performance was intentionally limited. Nonetheless, as rumors of new restrictions surfaced this summer, the CEOs intensified their lobbying efforts in Washington. Intel's Patrick Gelsinger, Nvidia's Jensen Huang, and Qualcomm's Cristiano Amon met with White House officials to emphasize the importance of their concerns.

Gelsinger reportedly conveyed, "Without orders from Chinese customers, there will be much less need to proceed with projects such as Intel's planned factory complex in Ohio."

Furthermore, the Semiconductor Industry Association criticized the government's restrictions in a statement, describing them as "broad, ambiguous, and at times unilateral." They cautioned that these measures could harm the industry's competitiveness.

Gelsinger emphasized the significance of the Chinese market, stating, "Right now, China represents 25 percent to 30 percent of semiconductor exports... This is strategic to our future; we have to keep funding the [R&D], the manufacturing, etc."

The semiconductor trade dispute began a little over a year ago when the Biden administration prohibited companies from supplying advanced chips and chip-making equipment to China, escalating the trade tensions initiated by former President Donald Trump. These restrictions, along with the CHIPS and Science Act of 2022, were framed as efforts to limit China's technological capabilities due to national security concerns. China responded by sanctioning US semiconductor giant Micron Technology in May 2023 and imposing export restrictions on rare earths critical to the global chip-making industry.

In August, President Biden signed an executive order authorizing the regulation of US investments in Chinese entities involved in national security-sensitive technologies in sectors including semiconductors, quantum information technologies, and certain artificial intelligence systems.

The US has also encouraged its allies, including South Korea, Japan, the Netherlands, and Taiwan, to restrict or ban chip sales to China and relocate production facilities away from China, potentially to Europe or the United States.

China has repeatedly warned that these restrictions disrupt global supply chains and harm not only Chinese companies but also semiconductor manufacturers worldwide. China's Commerce Ministry spokesman He Yadong stated, "The US measures to restrict chip exports to China violate market rules and lead to fragmentation in the global semiconductors market."

In response to Washington's restrictions, reports emerged in September that China was considering providing financial support to its domestic semiconductor chip-manufacturing industry through a state-backed investment fund.