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Futuristic central processor unit. Powerful Quantum CPU on PCB motherboard with data transfers. For a while now, there’s been a lot of talk about export controls in the semiconductor industry – but now it seems like the single largest U.
S. tech company by market cap, Nvidia, is likely to end up on the Biden administration’s naughty list, just in time for Christmas. This month, the industry is seeing a flurry of reports about enhanced regulatory controls of U.
S. chipmakers selling products to China – with Nvidia mentioned by name. Specifically, the Biden administration has asked Nvidia to look into how its chips ended up in China, despite specific laws preventing such sales.
In reaction to the U.S. Department of Commerce communications, Nvidia reportedly reaffirmed its commitment to export controls, and criticized a “gray market” (some would call it black) where third-party resellers can get around those rules.
The company is also allegedly increasing its lobbying presence in Washington, and hiring people from the federal government, in what some say as an effort to anticipate a new regulatory environment. Forget Chrome—Google Starts Tracking All Your Devices In 8 Weeks Bitcoin Suddenly Surges Back To $100,000 On Huge $20 Trillion Price Prediction FBI Warns Gmail, Outlook, Apple Mail Users—Check 3 Things To Stop Attacks Cracking Down on International Chip Sales For a while, it was no secret that companies like Nvidia and AMD had numerous ways to make end runs around these regulations from the U.S.
government. “Joe Biden's final move to stop China from racing ahead of the US in AI may be too little too late,” wrote Ashley Belanger at Ars Tecnica Dec. 2 , presumably in reference to the prior inability of the government to rein in thse kinds of sales.
One example is where the companies will manufacture slightly different technology so that the chips comply with export controls. Making a lower capacity chip can allow the company to get a greenlight to ship that technology to China. Or they can simply sell to third parties and places like Singapore and Malaysia, who will then resale to the Chinese.
A brand-new Biden administration change is attempting to close that particular loophole, according to Wall Street Journal reports – an executive order that is allegedly pending in the White House would limit sales of chips anywhere in the world, to stem efforts to smuggle or resell to China on the gray market. Insiders contend that U.S.
chip makers are doing all they can to prevent this executive order from coming out, as explained by articles like this one from the NYT. Other Concerns In addition, the U.S.
government is also wondering why American ship technology is ending up in Russian military equipment involved in the war in Ukraine. But back to Nvidia: a new antitrust investigation has chipped away at the company’s stock value, although that ticker rests at a healthy $131 and change as of press time. Meanwhile, the Chinese are announcing banning certain raw material exports to the U.
S. of rare earth metals gallium and germanium. In terms of trying to enforce U.
S. chip export controls, that sort of activity might be described as the biggest most intense game of Whack-a-Mole ever. Certain types of black markets are almost impossible to control, and it’s unlikely that one country, especially the U.
S. where cash is king, is going to be able to gatekeep all of its private sector sales effectively. Take a look at this excerpt from a piece by Barath Harithas and Andreas Schumacher at the Center for Strategic and International Studies , where the entire essay goes over the thorny and Byzantine history of U.
S. export controls over the last three years or so: “While a piece of semiconductor manufacturing equipment cannot be exported to China from U.S.
factories, the same equipment produced in an overseas facility can legally be sold to an advanced logic fab in China, provided no U.S. persons are involved in its manufacturing, sale, installation, or servicing, even if the customer is on the U.
S. entity list. This effectively created a backdoor in the control regime.
To address this, the United States introduced a Foreign Direct Product Rule (FDPR) for semiconductor manufacturing equipment (SME). The FDPR subjects products made abroad to U.S.
export restrictions if produced using U.S.-origin technology, software, or equipment.
This move aims to prevent companies from circumventing restrictions by relocating production or relying on foreign facilities to supply restricted technologies to entity-listed Chinese firms.” But one thing is for sure – people with skin in the game are paying attention. They want to understand how trade control activity between the U.
S. and China is going to affect the next generation of data centers and LLM applications that are having a huge impact on our businesses and our lives. In short, the technology race is heating up – and semiconductor technology is in the limelight.
Keep an eye out here as I continue to look at the trends shaping the market, the geopolitical forces behind those trends, and what all of the players are doing as we get to the end of a banner year for technology..
