A major chip industry trade group took the extraordinary step Monday to urge the Biden administration to refrain from further restrictions on trade with China until the industry can evaluate the impact of current and proposed restrictions.
The statement issued by Semiconductor Industry Association describes the importance of trade with China and the possibility that some administration restrictions could hurt the progress seen with the passage of the CHIPS and Science Act last year. SIA represents nearly all large US chipmakers and many others globally.
The statement from SIA reads in part: “Allowing the industry to have continued access to the China market, the world’s largest commercial market for commodity semiconductors, is important to avoid undermining the positive impact of this [CHIPS and Science Act] effort. Repeated steps, however, to impose overly broad, ambiguous, and at times unilateral restrictions risk diminishing the U.S. semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China.
“We call on both governments to ease tensions and seek solutions through dialogue, not further escalation. And we urge the administration to refrain from further restrictions until it engages more extensively with industry and experts to assess the impact of current and potential restrictions to determine whether they are narrow and clearly defined, consistently applied, and fully coordinated with allies.”
A spokesperson for the US National Security Council said the trade sanctions are meant to ensure that technologies by US companies are not used to undermine national security. "We have been deliberate about getting this right, including through extensive public comment on regulations, and through intensive coordination with allies and partners, the Hill, industry, and other stakeholders," the spokesperson said in a statement.
In addition to US trade restrictions imposed last October on sales of advanced chips to Chinese companies and sales of advanced chipmaking gear, chip executives are concerned about a more recent move by China to limit exports of gallium and germanium minerals set to take effect Aug. 1. Most analysts see the China move as a reaction to the US sanctions from last year.
The US has also been considering setting a limit on outbound investments by US companies in China. Treasury Secretary Janet Yellen told reporters on a recent trip to China to meet top government officials that no final decision had been made on such limits. “I was able to explain to my Chinese counterparts that if we do implement such restrictions that we will do so in a transparent way,” she said at the time.
Any new curbs or sanctions will “be highly targeted and clearly directed narrowly at a few sectors where we have specific national security concerns,” Yellen added….”I want to allay their fears that we would do something that would have broad-based impacts on the Chinese economy. That’s not the case. That’s not the intention.”
Sources have told major US news outlets that the Biden administration is weighing the possibility of requiring cloud provides like Azure and AWS to seek government permission before serving Chinese companies seeking to train AI models. AI modeling puts a strong demand on advanced chips, including GPUs, which would raise alarms for chipmakers of all types.
One US chipmaker, Micron, has been the most vocal about trade concerns with China following a May 21 decision by the Cyberspace Administration of China telling its China-based tech manufacturers to stop using Micron chips over security concerns.
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At the conclusion of her trip to China including a meeting with Premier Li Qiang, the number 2 leader in goverment, Yellen issued a warning while also calling for healthy competition with China. “We seek healthy economic competition that is not winner-take-all, but that, with a fair set of rules, can benefit both countries over time. The United States will, in certain circumstances, need to pursue targeted actions to protect its national security, and we may disagree [with China] in these instances.”
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Fortune reported that CEOs of Intel, Qualcomm and Nvidia were planning to meet with Biden administration officials this week on matters involving trade with China, including potential curbs that could affect the revenues they earn from sales to Chinese companies.