Benzinga - by Anusuya Lahiri, Benzinga Editor.
China opposes the U.S.’s recent tightening of semiconductor export regulations.
What Happened: Chinese regulators criticized the U.S.’s restrictions, which were enacted in October.
The new rules have impacted exports and affected companies like Nvidia Corp (NASDAQ:NVDA) and Advanced Micro Devices, Inc (NASDAQ:AMD), signaling a growing tension between the two nations.
Last week, the Biden administration updated its export rules to restrict China’s access to U.S. artificial intelligence chips and chipmaking tools, Reuters reports.
Also Read: Nvidia’s Push for AI Advances Promises Lower Costs, Challenges $7T Chip Initiative
This action is part of a broader strategy to limit Beijing’s chip manufacturing capabilities over national security concerns.
A spokesperson from China’s Commerce Ministry highlighted the U.S.’s expansion of the national security concept, its arbitrary rule revisions, and the implementation of stricter controls. According to the spokesperson, these steps not only introduce additional hurdles and a higher compliance burden for Chinese and American companies seeking normal economic and trade relations but also generate significant instability for the worldwide semiconductor sector.
In 2023, China experienced a notable 14% rise in chipmaking machine imports, totaling nearly $40 billion, despite an overall 5.5% drop in total imports.
This increase, the most significant since 2015, highlights Chinese chipmakers’ aggressive expansion of new semiconductor factories, aiming to enhance national production capacities amid export restrictions.
China initiated a $40 billion state fund to bolster its chip sector in response to the U.S. ban.
Moreover, the development of an advanced 7-nanometer smartphone processor by Huawei Technologies and SMIC signifies strides toward establishing a self-sufficient Chinese chip ecosystem. Several Chinese semiconductor design firms have also engaged Malaysian companies to assemble high-end chips, primarily GPUs, to circumvent limitations.
In a significant shift influenced by U.S. sanctions, Nvidia was outbid by Huawei Technologies for a crucial artificial intelligence chip order from Baidu Inc (NASDAQ:BIDU) in November.
Price Actions: NVDA shares traded higher by 0.16% at $904.82 premarket on the last check Monday.
Also Read: Nvidia Leads AI Chip Rivalry with New GPUs, While AMD and Intel Bet Big on AI PCs
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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