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Chip industry groups slam expected rules in private letter to Biden

Daniel Nenni

Admin
Staff member
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(Reuters) - A half-dozen trade groups from the semiconductor and manufacturing industries sent a private letter to U.S. President Joe Biden complaining that new export controls expected this week were rushed through without consulting them.

The Biden administration on Monday released regulations on where computing chips from Nvidia can be placed around the world, setting up a three-tier system in which most nations will need to obtain licenses to build AI data centers with U.S. chips.

In a letter to Biden dated January 13 that was not released publicly, trade groups including the Semiconductor Industry Association, which represents chip firms, and SEMI, which represents firms that make tools to manufacture chips, complained about that rule as well as another rule that could come as early as this week.

"We understand that this additional rule will even more strictly control high bandwidth memory, without consideration of how such changes may impact U.S. companies or cede market share to global competitors," the letter said.

"Again, these pending regulations have been developed without appropriate industry consultation or the opportunity for public comment, despite their long-term impacts and economic and international significance."

The SIA and SEMI did not immediately respond to a request for comment.

High-bandwidth memory, currently manufactured by U.S. and Korean firms, is a critical ingredient to building advanced AI chips, and the rule would restrict its sale to China.

A source familiar with the expected rules said they could also reverse an earlier interpretation of the rules that allowed companies such as Lam Research, which supplies equipment to memory chip makers in China, to bring in hundreds of millions more dollars in revenue than it had previously anticipated.

Lam did not immediately respond to a request for comment.

 
It is ironic that China built their industry by selling to everybody yet restricting its domestic market to domestic players (often partnered with foreign companies), while the United States is trying to restrict its domestic players to its own domestic market, while keeping its domestic market open to foreign players.

What happens if China mounts a Manhattan or Apollo style push to catch up with the west, and builds credible alternatives to western technology with a guaranteed market that is forced to buy domestically?
 
I feel like with or without these rules, China will probably catch up with the US in AI and related technologies at some point. The new rule seems like it is trying to slow things down by limiting Chinese companies’ access to the latest technology, making it harder for them to bootstrap their own solutions.

I think this ties into the concept of "卷" (juǎn), or "involution," a modern Chinese internet slang term. It describes intense competition and overworking. Many people point out that there's a high unemployment rate among college graduates in China, but companies like Huawei still hire large numbers of them. My friend mentioned that some companies even let their staffs to sleep in the office to work over-time. This relentless drive likely contributes to their rapid progress in technology.

In contrast, places like Australia are moving in the opposite direction. They're proposing four-day workweeks (7.6 hours per day) and promoting initiatives like the "right to disconnect" after working hours. The cultural and work ethic differences are stark. Just some perspectives.
 
I feel like with or without these rules, China will probably catch up with the US in AI and related technologies at some point. The new rule seems like it is trying to slow things down by limiting Chinese companies’ access to the latest technology
I agree - if they had full access to western chips, fabs, equipment, and software their AI would catch up with the west fairly fast. But I think without these restrictions they will forever be bound within the western semi ecosystem. To develop their own parallel ecosystem (machine tools, software stack, chemicals industry, fabs, and expertise to run it all) would be too costly and painful. In the event of a real war, the west can cut them off and it will take years to catch up and depriving them of crucial inputs for their war effort.

Now that the restrictions are in during peacetime, they are forced to develop parallel technologies with Manhattan scale pressure, infinite govt funding, and guaranteed market access. Plus all the young people will be stimulated with a ‘learn science, save the country’ mentality.
 
I agree - if they had full access to western chips, fabs, equipment, and software their AI would catch up with the west fairly fast. But I think without these restrictions they will forever be bound within the western semi ecosystem. To develop their own parallel ecosystem (machine tools, software stack, chemicals industry, fabs, and expertise to run it all) would be too costly and painful. In the event of a real war, the west can cut them off and it will take years to catch up and depriving them of crucial inputs for their war effort.

Now that the restrictions are in during peacetime, they are forced to develop parallel technologies with Manhattan scale pressure, infinite govt funding, and guaranteed market access. Plus all the young people will be stimulated with a ‘learn science, save the country’ mentality.
I don't think so. I believe the fundamental industrial policy is to move up the supply chain, with leading-edge manufacturing representing the very top. Even though they would import chips from other countries, they would still try to develop their own due to inherent mistrust. We can sense those feelings here—people are name-calling China, but that is not the way to foster long-term business relationships. Just my opinion.
 
Can they really become leading edge when Huawei and others were all using TSMC and Android?
 
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