Electronics

According to Huacheng Import and Export Data Observation, the US Department of Commerce will take action as soon as early as July to prohibit Nvidia (NVDA) and other chip manufacturers from exporting chips to customers in China and other countries of concern without obtaining a license in advance. This is an expanded measure taken by the United States in October 2022 on export control measures, attempting to further weaken China's ability to build AI technology.

Nvidia's response is to create an AI chip version called A800 for the Chinese market. Its performance is lower than the threshold specified by the United States Department of Commerce, complies with the export control regulations of the U.S. government, and cannot exceed the export control limit through programming. This chip replaces the A100, which is widely used for AI computing in data centers.

According to Huacheng Import and Export Data Observation, at that time, a spokesman of the United States Department of Commerce said that if the chip performance is lower than the performance limit in the latest US restrictions, it can be exported to China. But the spokesperson stated that companies should conduct due diligence during transactions.

Now, the United States Department of Commerce is considering new restrictions that will prohibit the sale of A800 chips without a license, and is also considering restrictions on leasing cloud services to Chinese AI companies, which have used this leasing arrangement to circumvent the export ban on advanced process chips. It is worth noting that the launch time of this rule is still uncertain, and chip manufacturers are still pushing the United States Department of Commerce to give up or relax new restrictions.

These discussions were conducted after the rise of so-called generative AI tools (such as ChatGPT of OpenAI). These AI technologies became a Social phenomenon after the introduction of export control measures last year. American policy makers increasingly view AI from the perspective of national security, believing that weapons using AI may gain advantages in the battlefield, and AI tools may also be used to manufacture chemical weapons or generate malicious Computer code. However, for the Biden administration, minimizing the impact on the country and its allies while protecting critical technologies is a huge challenge. U.S. National Security Advisor Jake Sullivan once said, "The United States is using high walls in small courtyards to protect critical technologies," according to a report by Huacheng Import and Export Data Watch.

The United States Department of Commerce implemented a series of strict export control measures on advanced semiconductor and chip manufacturing equipment in October 2022, but has not yet issued formal regulations to systematize these rules. Since last autumn, the United States has collected opinions from affected companies and negotiated with allies to finalize the rules.

The Biden administration has convinced the Netherlands and Japan to join US policies and is attempting to collaborate with these two countries to unify the list of these controlled items. The Netherlands and Japan have world-class manufacturers of chip manufacturing equipment. According to the agreement reached by the United States, Japan and the Netherlands in January 2023, the Netherlands will prohibit ASML Holding NV, the Dutch photolithography manufacturer, from selling at least part of immersion Stepper to China, which is the most advanced equipment in the company's deep ultraviolet Stepper products. This type of device is crucial for manufacturing cutting-edge chips. Japan will set similar restrictions on Nikon Corp.

However, the Biden government intends to extend the export exemption plan that expires in October 2023, which will allow Korean and Taiwan, China semiconductor manufacturers to maintain their business in China and can continue to operate and expand their existing factories producing mature process chips in China.

According to Huacheng Import and Export Data Observation, in October last year, the United States imposed restrictions on China's semiconductor industry, but also provided one-year exemptions for companies such as Samsung Electronics and TSMC in South Korea. These companies have invested billions of dollars to build factories in China. The practice that the US Department of Commerce will extend, rather than gradually reduce, or even terminate the exemption means that the Biden government recognizes that in a highly integrated global industry, it is more difficult than expected to engage in scientific and technological decoupling. This is also at a time when some foreign companies are dissatisfied with Washington's expanding intervention in their business. The United States is trying to prevent advanced process chips from falling into the hands of countries it cares about by restricting the export of chips and related manufacturing equipment, which includes not only chips produced by American manufacturers, but also those of its allies.

Currently, chip manufacturers around the world have mostly resisted the US approach. Some governments in Asia and Europe have also responded to this restriction policy. The strongest criticism comes from South Korea. China is South Korea's largest export market, far ahead of its other trading partners. Several South Korean companies have considered giving up Federal government of the United States's assistance.

Nevertheless, the Biden administration is still weighing a new administrative order that will implement controls on investments by American venture capitalists and private equity firms in China and other countries where the United States sees them as competitors. The Investor Advisory Committee under the U.S. Securities and Exchange Commission (SEC) held a symposium, inviting institutional investors and experts in the field of national security to try to assess whether the investment behavior of some private funds may become a helper for some overseas countries to research and develop sensitive technologies.

In recent years, the U.S. government has strengthened its review of China's investment in the United States, especially through the Committee on Foreign Investment in the United States (CFIUS), but little is known about U.S. investment in China. The Biden government is concerned that these investments may help China develop or enhance its high-tech industries, such as AI, semiconductors, and quantum computing.

It can be seen that in order to strengthen the so-called national key capabilities, the United States has begun to design multiple defense mechanisms. In addition to the Inbound Investment Review mechanism and the Export Controls Program for controlled items in the United States, the Outbound Investment Review mechanism for foreign investment in the United States is also being weighed, although the form of such investment restrictions is uncertain, It may be targeted restrictions, new mandatory disclosure requirements, or a combination of both. However, the various restrictive policies of the Biden administration have brought great risks and challenges to the supply chain, industrial chain, and value chain. Our enterprises should actively strengthen communication and cooperation, jointly implement security, development, and civilization initiatives, strive to support market economy and free trade, and achieve a more resilient and sustainable economic and trade order. Huacheng Import and Export Data Observation Report.