The Impact of US Export Controls on AI Semiconductor Landscape
The US recently imposed new restrictions on exports of advanced semiconductors and manufacturing equipment to China. These new controls primarily target AI chips, equipment, and computing systems destined for Chinese companies working on national security projects.
The new rules refine and expand on previous export controls from October 2022. One major change is the addition of a “performance density threshold” that chipmakers like Nvidia will need to comply with. This metric calculates compute performance per area of silicon, which could sweep in more of Nvidia’s advanced AI chips like its A100 and H100.
What does this mean for various players in the semiconductor industry?
Nvidia – A setback but business still expected to exceed forecasts. Supply chain checks show GPU demand remains strong. But some upside to estimates removed given new license requirements.
TSMC – Unclear if Chinese customers can still obtain licenses for Nvidia chips. May slow TSMC’s leading edge production for China clients.
Semiconductor Equipment – New equipment export controls appear limited to logic chips above 14nm. Likely a benign impact for now.
Memory – Minimal impact expected for memory leaders Samsung and SK Hynix. Controls exempt memory and consumer chips.
China Internet & Cloud – Larger firms like Baidu have inventory/options, and smaller developers more exposed. Could delay AI product launches and data center buildouts.
Other Notes:
Dispite attempted lobbying to get RISC-V included in an element of these entity lists, it was not added, just as we predicted.
The latest export controls are an evolution of prior restrictions, not a dramatic overhaul. But they do introduce new compliance challenges, especially for Nvidia. Over time, these technology access limits could slow China’s AI development and decrease its global semiconductor market share. But near-term impacts appear manageable for most industry players.
The geopolitical tensions underlying these export controls bear monitoring to assess if rules are expanded further or potentially relaxed. For now, advanced semiconductor and equipment companies exposed to China seem to face manageable, but not disastrous, repercussions.