Nvidia 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.
“China lags the US badly”
In the same sense that the Corvette lags the fastest Ferraris badly.
For 99.9% of the tasks 99.9% of users ask of their graphics chips, and cars; 2-3 year old Nvidia cards were, like Corvettes are, plenty fast enough.
If current NVidia chips were for sale next to current Chinese ones for close to the same price, lots of Chinese would pick the Nvidia ones in direct competition. But it’s not as if they’ll be all that inconvenienced in practice, by what’s available locally. While conversely, the ban is a huge transfer of wealth and market share: From NVidia. To Chinese competitors; who can then use the windfall to catch up and pass NVidia even faster than they otherwise would.
As an aside: Among applications who are likely to be affected by the performance difference; military ones almost certainly make up a big part. So it’s not as if the ban won’t have some immediate “national security” implications. “We” will, as a result, be able to detect, map, intercept and route missiles, etc., faster than “them”, as a result of having faster chips. Problem is that chip economics is such that even the US military is a small part of the market. They’re not driving demand, hence development. Hence, lower sales for NVidia, and greater sales for “NChina”, will render NVidia’s advantage shorter lived than otherwise.
US gov has a bottomless pocket whereas corporations (the big market) is limited by profit requirements. What the military wants, it gets.
It doesn’t matter how many quadrillion a pack of monkeys has available to wrap in banapeel and throw at some chip maker. Their “spending efficiency” wrt driving advancements, is near zero.
Chip advancements are driven by observed needs arising from the millions of differing workloads the chips are exposed to every day. No amount of “money” spent by some five year planner’s poorly dreamt up “requirements”, will ever make up for the fact that solutions to every other leading edge user’s requirements are now being competitively provided by others. Free competition to solve real, un-“managed” user problems; unfettered by five year planners, “lawyers”, politicians, “financiers” and similar useless rabble; is what leads to progress. Anything else, lead to nothing but decay. The freest country advances the fastest. And by now, China is a vastly freer place than America.
My electrical engineering classes 20 years ago were about 80% foreign born, including a big group from China.
Look at the demographics of any technical area at US universities or at the tech industry workforce and you’ll see similar patterns.
How could anyone possibly imagine it would be hard for technology to get transferred, copied, or redeveloped by the countries that provide the labor to develop it in the US?
Wont these billions of chips just now ship to an intermediary? Then they forward it to China. Simple. Call it a work-around. It adds cost and decreased efficiency, while the little guy loses again, and pays more in the end.
Probably just like with Russian crude
China is a huge market for semiconductors. But NVDA is still trading near recent highs so the market is not taking this too seriously.
I haven’t worked for any of these companies, but if the picture I am seeing applies, at least half the employees of these companies are naturalized Chinese. What are they going to do next? Ban naturalized Chinese from working in China. It’s not like living there like a gulag.
The goverment forbids chip exports, but allows computer and Smart TVs imports from China.
Schizo behaviour.
Turns out, Jim Rickards was right when he wrote Currency Wars in 2011.
Currency wars turning into hot wars turning into a world on fire.
Then again, the Chinese aren’t idiots.
They’re producing 7nm chips despite sanctions and blockades of lithography machine related technology.
Another example of the US punching itself in the face.
But by all means, keep involving yourself in every single conflict and war and keep sanctioning everyone on the planet.
Keep up with reckless spending and increasing the national debt.
Surely that’ll work out for you as good as all other failed policies…
For the sake of everyone on this planet, please elect some adults in the room this time.
Please name a single adult who has traction? If truth is the first casualty of war, decency is the first casualty of politics.
So take money from taxpayers to give it to chip manufacturers to build factories and then make it illegal to sell the chips the new factories make. This makes sense.
I asked ALL of my Friends, except a few who distinguished themselves: are Tariffs going to Hurt China. YES.
Tariffs are a TAX ON US.
Tariffs are a tax. So what? Everything you do or buy has taxes imbedded in the price. US based products have a lot of imbedded tax (Wage tax, RE Tax, Income Tax) as well as regulatory costs and environmental protection. Imports have very little imbedded US tax and lack environmental protections. Imports should have some level of US tax as we need an industrial base. It makes no sense to export our industrial base to totalitarian regimes that are strategic enemies. We didn’t do this is in the cold war with the USSR and it doesn’t make sense to do this with China.
The discussion shouldn’t be about tariffs but about what level they should be set at.
Tariffs are an incentive to reshore jobs for unskilled labor. USA has the largest third world population of any industrialized nation. The unskilled subsist on welfare paid by working people. We must put the unskilled welfare class to work doing anything productive in order to be a competitive society. Every oar must be in the water rowing the economic boat.
Hyper inflation defaults on the national debt that cannot be paid. Hyper inflation also reduces the value of transfer payments and minimum wage. Hyper inflation is thus an incentive for the welfare class to get a job.
While I agree with the idea of putting people to work, the problem is that no one is going to do these unskilled labor intensive jobs as long as welfare exists in its current form.
In other words, why do work when you can get the same stuff on welfare doing nothing. Unless welfare is reformed it won’t matter how many unskilled jobs you try to bring back because no one is going to work them.
Nope. The people simply don’t exist. Too many people retiring, not enough babies born the past 20 years and that’s why we have 3.8% unemployment.
Want to know how bad it is? Texas has huge aging water infrastructure and it needs workers so they are now asking high schoolers to do the work. The problem here is taking high school kids and assigning them to digging ditches and installing pipe takes them away from being engineers, doctors, and other professions.
https://www.texastribune.org/2023/10/18/texas-high-school-water-workforce/
The problem isn’t limited to Texas, every state has 100 year old utility infrastructure: water, gas, electrical, etc. It will only get worse over the next 10 years.
All of which seems funny given that the 100 year old stuff was built with a population that was probably 1/4 of what we have now AND without modern machinery.
Something tells me we’ll be fine replacing that infrastructure. And if we are not, we could always import a million citizens from Gaza. They have a 40% unemployment rate there and almost 50% of the population is under age 20. So lots of working age people that need jobs.
Back then we didn’t have 80 million boomers taking showers, flushing toilets and watering their lawns either. It’s the immediate scale that’s the problem now but that’s for the perfect illustration of where we were and where we are now.
Can’t reply directly to Tim’s comment so I’ll place this here–
It is much easier and cheaper to build than it is to re-build infrastructure, especially when other development has occurred during the intervening 100 years. You aren’t just digging a ditch to bury a pipe, there are a lot of complicating factors that didn’t exist way back when. Add in the fact that either you significantly disrupt essential services or build the new system in parallel to the old one and it is easy to see why governments and elected officials defer maintenance, raising the chance of failures (e.g. water main breaks).
I remember when private property was a concept the United States defended. Biden is both a tyrant and a fascist just like his predecessors.
Just a WEF puppet is all he is Totally a tool and a pathetic one at that
In the end, this madness will be the death knell for another US industry. Only this time instead of steel or some other labor intensive manufacturing it will be micro processors.
This reminds me of the stupid decision one of my former companies once made. We sold a simulator product to our competitors to use with their systems that they then sold to customers (ones we both competed for). Management one day decided that this was helping them sell more systems and that was hurting us so the decision was made to stop selling simulators to our competitor. At the time I told management that they’d develop their own and that then we’d lose out on simulator sales to the competitor AND have to compete on selling those simulators to all our other customers. Eventually I was proved right and what’s worse, their simulator ended up being better than ours and so that business unit was eventually shut down. This is what’s going to happen once China gets theirs on par because on price the US will lose the international market.