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US Chip Leaders Discuss Future of Chinese Trade Amid Potential Restrictions

In light of potential export curbs, top US chip companies are in active dialogue with Biden administration officials to outline the future of their dealings with China.

Chips stated to be Chinese and US made
Chips stated to be Chinese and US made

High-Level Talks Between Chip Companies and US Government

In a significant development, leading executives from US chip companies are holding discussions with Biden administration officials regarding China policy. The meetings have been organized as the prominent semiconductor lobby group urges the government to reconsider further restrictions that are currently under consideration.

Meeting with Secretary of State Antony Blinken

Secretary of State Antony Blinken recently held conversations with top executives from chip companies about the state of the industry and the supply chain concerns, following his recent visit to China. The talks offered an opportunity for these executives to understand the government's viewpoint on the semiconductor industry and its challenges, particularly those related to China.

Government Officials Meet Chip Industry Representatives

Commerce Secretary Gina Raimondo, National Economic Council Director Lael Brainard, and National Security Council Director Jake Sullivan are among the government officials who have held meetings with Intel, Qualcomm, and Nvidia. However, it's important to note that not every official was expected to meet with every company.

The Semiconductor Industry's Stance on China

Last year, China accounted for a staggering $180 billion in semiconductor purchases, establishing itself as the largest single market globally. As such, the chip industry is naturally invested in protecting its profits in China, especially as the Biden administration contemplates additional restrictions on chip exports. The Semiconductor Industry Association (SIA), in particular, is advocating for the continued access of its industry to the Chinese market.

The Government's Response to Industry Pressure

In response to industry pressure, officials from the Biden administration have defended their actions by stating that they've closely consulted with the industry. The administration is considering updating a series of rules introduced in October to restrain China's chip industry, coupled with a new executive order limiting certain outbound investments.


Future of Chip Exports to China

China's recent move to restrict the export of raw materials like gallium and germanium, which are vital for chip production, is a key concern for the U.S. semiconductor industry. The industry group warned that further restrictions by U.S. officials could disrupt supply chains, prompt retaliatory actions from China, and cause significant market uncertainty.

Critical Sales at Stake for Nvidia, Qualcomm, and Intel

Nvidia, Qualcomm, and Intel, three of the most significant players in the sector, have vital sales dependent on China. Qualcomm stands out as the only company licensed by U.S. regulators to sell mobile phone chips to Huawei Technology Co Ltd. Simultaneously, Nvidia and Intel have both introduced AI chips specifically designed for the Chinese market.

Commerce Secretary's Role in Semiconductor Subsidy Program

Commerce Secretary Gina Raimondo is responsible for a $39 billion semiconductor manufacturing subsidy program approved by Congress last year. In addition to this, the law also introduced a 25% investment tax credit for building chip plants, estimated to be worth $24 billion.