Nvidia (NVDA) produced a chip specifically to get around Biden’s export curbs. The US just banned that chip for export too.

US Escalates Tech War, Cuts Supply of AI Chips to China

The Bureau of Industry and Security, announces New Restrictions on Advanced Computing Semiconductors, Semiconductor Manufacturing Equipment, and Supercomputing Items to Countries of Concern.

Today [October 17], the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) released a package of rules designed to update export controls on advanced computing semiconductors and semiconductor manufacturing equipment, as well as items that support supercomputing applications and end-uses, to arms embargoed countries, including the PRC [People’s Republic of China, and to place additional related entities in the PRC on the Entity List.

“Export controls are a powerful national security tool, and the updates released today build on our ongoing assessment of the U.S. national security and foreign policy concerns that the PRC’s military-civil fusion and military modernization present,” said Under Secretary of Commerce for Industry and Security Alan F. Estevez. “BIS will continue to assess the security environment and technology landscape and will not hesitate to act as appropriate.”

Restrictions

• Restricts the export of chips if they exceed either of two parameters: (1) The preexisting performance threshold set in the October 7 rule; or (2) A new “performance density threshold,” which is designed to preempt future workarounds.
• Establishes a worldwide licensing requirement for export of controlled chips to any company that is headquartered in any destination subject to a U.S. arms embargo (including the PRC) or Macau, or whose ultimate parent company is headquartered in those countries, to prevent firms from countries of concern from securing controlled chips through their foreign subsidiaries and branches.
• Creates a notification requirement for a small number of high-end gaming chips to increase visibility into shipments and prevent their misuse to undermine U.S. national security.

Nvidia, Intel, AMD Hit With Export Bans

CNN reports US Escalates Tech Battle by Cutting China Off From AI Chips.

Advanced artificial intelligence chips, such as Nvidia’s H800 and A800 products, will be affected, according to a regulatory filing from the US company.

The regulations also expand export curbs beyond mainland China and Macao to 21 other countries with which the United States maintains an arms embargo, including Iran and Russia.

The measures, which have affected the shares of major American chipmakers, are set to take effect in 30 days.

Chips used in phones, video games and electric vehicles were purposefully carved out from the new rules, according to senior administration officials.

But these assurances are unlikely to placate Beijing, which has vowed to “win the battle” in core technologies in order to bolster the country’s position as a tech superpower.

In July, Beijing hit back by imposing its own curbs on exports of germanium and gallium, two elements essential for making semiconductors.

Nvidia’s (NVDA) stock closed down 4.7%, while Intel (INTC) slipped 1.4%. AMD (AMD) shares ended 1.2% lower.

In its filing, Nvidia said the rules imposed new licensing requirements for exports to China and other markets such as Saudi Arabia, the United Arab Emirates and Vietnam.

The company said its A800 chip, which was reportedly created for Chinese customers in order to circumvent last year’s restrictions, would be among the components affected.

This will work for a while and then it won’t. Previous technology bans drove China to produce its own cell phone chips.

US Sanctions Fail Again, China Now Produces Its Own Advanced Computer Chips

On September 4, I commented US Sanctions Fail Again, China Now Produces Its Own Advanced Computer Chips

Trump and Biden both tried to cut off China’s supply of advanced microchips. So China is now producing its own.

Sanction Failure

The Global Times comments “The trade war, without a doubt, has proven to be a failure. While the tech war is ongoing and the US maintains an advantage in the high-tech sector, the momentum of the Chinese people’s determination to catch up despite the pressure, and a strong sense of moral conviction, are something that the US cannot match.”

China is producing chips with a 7 nanometer process while the most advance US chips are 4 nanometers. For comparison purposes the thickness of a sheet of paper is about 100,000 nanometers.

But this advance, good enough for advanced 5-G, was not supposed to happen at all.

The US wanted to knock Huawei out of the 5G market. Now, instead of China using US chips, it is producing its own chips.

China rubbed it in US Commerce Secretary Gina Raimondo’s face by releasing the phone on her visit.

Qualcomm To Lose Up To 60 Million Chipset Orders in

Please consider Qualcomm To Lose Up To 60 Million Chipset Orders in 2024 Thanks To Huawei’s Kirin 9000S, Potential Profit Loss In The Billions

Trump’s sanctions on China, upped by Biden, forced Huawei’s hand. As a direct result, China will soon kiss Qualcomm goodbye.

Sanction Madness

Also note Trump Wants a 10 Percent Tariff on Everything, It’s Really a $300 Billion Tax Hike

A 10 percent global tariff would increase inflation, reduce jobs, and reduce US exports. Sanctions have the same impact.

The idea that you can restrict otherwise widely available technology from getting into certain hands seems silly.

All the bans will do is spur China to make its own chips. China lags the US badly, but it was not even supposed to get in the G5 ballpark.

Meanwhile, China reacted by cutting off certain rare earth minerals used in military equipment, cell phones, wind turbines, and EV batteries.

China produces or manufactures over 80 percent of rare earths. Good luck if China opts for much tighter bans.

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