Reacting to evident gaps from the previous chip export restrictions unveiled last October, the US government has introduced sterner limitations. The primary motive behind these measures is to prevent China’s defense sector from accessing avant-garde semiconductor technology.
Nvidia’s Chinese Market Setback
With the fresh restrictions in place, Nvidia revealed that its sales of two elite artificial intelligence chips, A800 and H800—specifically crafted for the Chinese clientele—will be halted. Furthermore, a notable gaming chip from their portfolio will also face the embargo. While other semiconductor giants like Advanced Micro Devices and Intel are under the shadow of these restrictions, Nvidia’s substantial revenue from China makes it the most vulnerable. The revelation caused a sharp 4.7% drop in Nvidia’s esteemed stock value.
Industry’s Reaction and China’s Response
The Semiconductor Industry Association, representing a colossal 99% of the US’s semiconductor revenue, criticized the new curbs. Their statement pinpointed the measures as being “overly extensive”, potentially endangering the US semiconductor environment and propelling overseas patrons to seek alternative sources. Meanwhile, the Chinese embassy expressed its staunch opposition, hinting at the broader implications since the restrictions also encompass Iran and Russia.
China’s Countermove and Global Implications
In an earlier response, China restricted exports of two pivotal materials—gallium and germanium—that serve as the backbone for the semiconductor sector. Dominating the global supply chain for these “minor metals”, China boasts of producing 80% of gallium and 60% of germanium, as noted by the Critical Raw Materials Alliance (CRMA). The escalating tug-of-war between these two economic behemoths has brought to light the impending threat of “resource nationalism”, where nations strategically stockpile essential resources to gain leverage.
Wider Impact on Global Semiconductor Trade
The ripple effects of these export limitations are not confined to the US-China realm. Key chip equipment producers like ASML in the Netherlands and even Japan have imposed their own set of semiconductor technology barriers on China. This ongoing power play, laden with restrictions and countermeasures, casts a shadow of uncertainty on global chip trade dynamics.
In summary, as the chip export restrictions saga unfolds, the global tech industry awaits with bated breath, anticipating the next moves of these two titanic economies.