China says Biden’s restrictions on new semiconductor technology will hurt the recovery

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  • President Joe Biden’s administration announced export restrictions on Friday, heightening tensions between the two countries and adding complexity to an industry facing weak demand. The measures are aimed at thwarting China’s attempts to build its own chip industry and improve its military power. These include restrictions on the export of some types of chips used in artificial intelligence and supercomputing, and stricter rules on the sale of semiconductor manufacturing equipment to Chinese companies.

China “is investing resources in developing supercomputing capabilities and aims to become a world leader in artificial intelligence by 2030,” said Thea D. Rosman Kendler, undersecretary of export control at the Ministry of Commerce. “We use these capabilities to monitor, track, and monitor our own citizens and to advance our military modernization.”

Mao Ning, a spokesman for China’s foreign ministry, said on Saturday that the measures coming into effect this month were unfair and “harm the interests of US companies,” according to a transcript of an official briefing. They are “damaging global industrial and supply chains and the global economic recovery,” she said.

The United States is trying to keep Chinese companies from transferring technology to its own military, and to keep Chinese chip makers from developing the ability to manufacture advanced semiconductors themselves.

The government action adds further uncertainty to investors already trying to figure out how much semiconductor demand could shrink. Companies like Applied Materials and Intel. China is the largest single market for their products and a key component of the global supply he chain of electronics used around the world.

The regulation comes at a difficult time for the chip industry, which is suffering from a sharp drop in demand for PC and smartphone components. Shares of many of the world’s largest chip makers plunged Friday after reports said they could be worse than previously thought.

Chipmaker stocks struggled throughout 2022 after the group rose 40% to 60% for three straight years. The Philadelphia Stock Exchange’s semiconductor index has fallen nearly 40% so far this year, its biggest annual drop since 2008 and most recently to its lowest level since November 2020.

extensive loss

Losses were widespread, with almost every component of the industry benchmark index in negative territory this year. NVIDIA Advanced Micro Devices Inc. is down almost 60%. AMD reported Thursday that its preliminary earnings for the third quarter were lower than expected. AMD and Nvidia have already revealed that China-related restrictions on AI chips will hurt sales. Nvidia said on Friday that the broader restrictions, already restricted by previous export controls, would not “materially impact our business.”
Suppliers of chips used in China’s supercomputers and related equipment will find it more difficult to obtain permission to fill orders once the new rules take effect. Assume that the application will be rejected.

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