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Chip CEOs Head to Washington to Talk China Policy

Senior executives from the United States' largest semiconductor firms will travel to Washington next week to meet with administration officials and legislators in a last-ditch effort to prevent new restrictions on their exports to China.

Intel Corp., Qualcomm Inc., and Nvidia Corp. plan to lobby against extending restrictions on the sale to China of certain chips and the equipment to manufacture the semiconductors that the Biden administration is set to implement in the coming weeks, according to sources with knowledge of the matter.

Although they do not expect to prevent all of the actions, the companies believe they have a window of opportunity to persuade the Biden team that an escalation would harm the White House's current diplomatic efforts to engage Chinese officials and establish a more productive relationship, according to people who requested anonymity because the trip is not yet public.

In the escalating dispute between Beijing and Washington, chip companies have assumed a central role. The United States, from which the majority of the technology originates, believes that restricting China's access to it will enhance national security and impede China's efforts to advance its military capabilities.

Companies have argued that if they are cut off from their greatest market, their ability to invest in advancing their technology will suffer, ultimately undermining the United States' leadership.

The three companies' representatives denied to comment.

By supplying components to smartphone manufacturers like Xiaomi Corp., Qualcomm CEO Cristiano Amon generates over 60 percent of his company's revenue in China. Pat Gelsinger, who visited Beijing earlier this month to demonstrate Intel's latest artificial intelligence processors, considers China to be his largest sales region. The country accounts for approximately a quarter of Intel's sales. And for Nvidia, led by co-founder and CEO Jensen Huang, China accounts for approximately twenty percent of revenue.

In October, the Commerce Department issued rules prohibiting the export of certain processors used in artificial intelligence applications and prohibiting the sale of certain semiconductor equipment to China, an announcement that shook the industry.

Chip equipment manufacturers such as Applied Materials Inc. have been forced to reduce their revenue projections by billions of dollars so far. However, the restrictions, which companies fear will be extended to other classes of processors, are affecting some device manufacturers as well. An approval process has limited Nvidia's ability to send its industry-leading artificial intelligence accelerators to China, costing the company sales.

Representative Mike Gallagher, a Republican from Wisconsin and chairman of a House committee on competition with China, said in a statement on Friday, "I'm alarmed that some American CEOs continue to advocate for weaker export controls on sensitive technology." The Biden administration must tighten export restrictions on sophisticated processors.

The administration intends to finalise and revise the measures by bolstering what has already been announced. Bloomberg reported earlier this week that the United States is using some of its influence over foreign companies to further restrict China's access. ASML Holding NV, one of the largest suppliers of chipmaking equipment, faces tighter restrictions from its home government in the Netherlands as well as new restrictions from the United States due to the fact that some of its components are manufactured in the United States.

In general, the United States' new rules will reflect the outcome of negotiations with Japan and the Netherlands, according to individuals with knowledge of the matter.

Reuters previously reported that some of the CEOs were scheduled to meet with U.S. officials.

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