Upgrading chips in the United States and Export ban on semiconductor equipment

On October 17th local time, the Biden government announced an update to export control regulations for artificial intelligence chips, including restrictions on the export of more advanced artificial intelligence chips and related semiconductor equipment to China. These measures will take effect on November 16th, 2023.

According to this latest rule, Nvidia's exports to China, including chips such as A800 and H800, will be affected. At the same time, the United States also included 13 Chinese technology companies such as Bi Ren Technology, Moore Thread, and Superconductor in the "physical list".

From the product names involved in this new regulation, it can be seen that the core objects of this restriction are advanced computing semiconductors, semiconductor manufacturing equipment, and supercomputer projects. And this new regulation is actually a revised and updated version of the rules released by the United States on October 7, 2022, which more strictly restricts China's purchase of urgently needed high-end chips.

The United States has strong AI chip computing power, while most of China's high-end AI chips are purchased from NVIDIA and AMD. The United States frequently adopts export control measures with the aim of preventing the development of China's artificial intelligence field.

On October 17th local time, after the Biden administration issued regulations on semiconductor export controls to China, the stock prices of many American chip companies fell in response. As of the close of the day, NVIDIA's stock price fell by nearly 5%, while Intel and Chaowei Semiconductor's stock prices also fell by about 1% respectively. Three American chip giants lost approximately $57.5 billion (approximately 420 billion yuan) in market value overnight.

The Wall Street Journal of the United States reported that the Biden administration's aforementioned measures will exacerbate the rift between it and American companies selling products to the vast Chinese market. The Semiconductor Industry Association of America has issued a statement stating that this will threaten the entire semiconductor ecosystem in the United States.

Since October 18th, multiple companies involved in China and the United States have responded to media reporters that they are accelerating communication with relevant industry chain enterprises and evaluating potential impacts.

A middle-level person from NVIDIA China said that due to the long chip industry chain, the company is currently actively communicating with upstream and downstream partners to take appropriate measures. The orders that have been reached will be delivered as scheduled, and the short-term impact on performance is limited.

A person related to Moore Thread said, "Currently, Moore Thread is only a startup company, and I didn't expect it to be included in the list this time. It shows that its impact is widespread, and it is urgent to accelerate the localization of chips

ASML pointed out that "from a medium to long term perspective, these export control measures may affect the ratio of our different machine sales across regions, but we do not expect these measures to have a significant impact on the company's financial situation in 2023 and our long-term outlook

Meanwhile, ASML stated that it will further clarify the scope of application of these new regulations to the US government and continue to comply with all applicable laws and regulations, including export control regulations, in the countries and regions where it operates.

Bi Ren Technology said, "The company strongly opposes the US Department of Commerce's move and will actively appeal to relevant US government departments and call on the US government to re-examine it

From the perspective of Chinese semiconductor companies, among the industry giants, Huawei, Alibaba, Baidu, and Tencent have already developed their own AI chips. For example, Huawei's Ascension series has already supported over half of the AI big model training in China; Baidu's Kunlun chip is positioned as a cloud AI universal chip; And Alibaba has launched a high-performance inference AI chip with light series; Tencent's self-developed AI inference chip, Zixiao, has been mass-produced and implemented in Tencent's conferences and other businesses.

Among AI related chip companies, there are not only listed companies such as Cambrian, Jingjiawei, and Haiguang Information, but also established and new startups such as Muxi, Bi Ren, Moore Thread, and Tiantian Zhixin. Many companies have already shifted from "international procurement" to local procurement or self research and self use, creating favorable conditions for the development of Chinese local chip companies. These companies, with their strong financial strength, have made sufficient preparations to cope.

In the current context of globalization, the Biden administration is constantly intensifying its efforts to upgrade the export ban on chips and semiconductor equipment, which is a short-sighted and irrational behavior. It will not only affect the healthy development of the global industrial chain, but also have a significant impact on the development and benefits of relevant manufacturers in the United States.

For China, the upgraded export restrictions imposed by the United States may pose a challenge and test to the booming semiconductor industry in the short term, but they also provide impetus for related enterprises to transform and upgrade. Against the backdrop of the global technology and trade wars provoked by the United States, how to adhere to the path of independence and innovation, constantly explore and innovate, and lead the industry will be the key to determining the future success or failure of global enterprises.