Affected by the upgrade of chip export controls by the US government, the chip sector in the US stock market fell sharply after opening on Tuesday. Among them, the trillion dollar leader NVIDIA experienced a drop of over 7%, while AMD and Intel also experienced a drop of over 2%. Chip giants such as TSMC, ASMC, and Qualcomm also experienced varying degrees of decline. On the same day, the US Department of Commerce BIS also announced the inclusion of two Chinese chip companies in the Entity List.
US government upgrades latest chip ban
On October 17th, the Biden administration updated export control regulations for artificial intelligence (AI) chips, which not only restricted American companies from selling chips to China, but also implicated chip equipment manufacturers such as Applied Materials, Pan Forest Group, and KLA. This is because the new measures have expanded the licensing requirements for exporting advanced chips to more than 40 countries outside of China, and imposed licensing requirements for chip manufacturing tools on 21 countries outside of China, expanding the list of equipment prohibited from entering these countries.
US Department of Commerce Secretary Gina Raimondo stated that the new measures aim to "plug loopholes" and stated that these measures may be updated at least annually in the future. She said, "The new restrictions will only affect a small portion of chip exports to China. Even after this rule update, China will import hundreds of billions of dollars of semiconductors from the United States. In addition, chips used in consumer products such as gaming consoles or smartphones will not be subject to export controls
Raymond also stated that the goal of the US restrictions is to prevent China from acquiring advanced semiconductors, which may drive breakthroughs in artificial intelligence, especially in military applications. US officials say they have no intention of harming China's economic growth.
Senior government officials also stated that if data center chips exceed the performance threshold set in October last year, or exceed the new performance density threshold benchmark measured in flops per square millimeter, the United States will simply restrict the export of data center chips.
And companies that want to export artificial intelligence chips to China or other prohibited areas must notify the US government. Senior government officials also stated that they plan to expand the list of semiconductor manufacturing equipment restricted by the United States.
Last October, the United States imposed bandwidth rate restrictions on AI chips exported to China, including NVIDIA A100 and H100 chips. Afterwards, NVIDIA provided alternative versions of A800 and H800 to Chinese companies.
ASML, a Dutch photolithography manufacturer, issued a statement on the new regulations on chip restrictions in the United States, saying that it would need to carefully evaluate any potential impact. However, as far as the company's current business is concerned, the number of chip manufacturers in Chinese Mainland that apply the new regulations involving advanced chip manufacturing is limited.
The statement also stated that the US chip export control measures may have an impact on the regional division of the company's system sales in the medium to long term, but are not expected to have a significant impact on the company's financial outlook for 2023, as well as the long-term scenarios for 2025 and 2030.
ASML emphasizes that it will seek further clarification from US authorities on the scope of these new regulations.
Two Chinese companies strongly oppose inclusion in the entity list
On the same day, the US Department of Commerce also announced the inclusion of Bi Ren Technology and Moore Thread in the physical list. Both companies have expressed strong dissatisfaction with this. Among them, Biren Technology released a statement stating that the company is concerned about the inclusion of Chinese technology companies such as Biren Technology in the physical list by the US Department of Commerce. The company strongly opposes the US Department of Commerce's move and will actively appeal to relevant US government departments, calling on the US government to re-examine it. Bi Ren Technology has a vision of "Intelligent Painting Global", strictly adhering to the laws and regulations of relevant countries and regions, and always operating legally and in accordance with regulations on this basis. The company is evaluating the potential impact of this incident on the company, preparing for response measures, and will communicate extensively with all parties.
Moore Thread, on the other hand, stated that the company was concerned about the news that the US Department of Commerce included Moore Thread in the "entity list" on October 17th local time, and strongly protested against this. Since its establishment, Moore Thread has strictly followed the laws and regulations of relevant countries and regions, always adhering to a legal and compliant corporate culture and management philosophy, and establishing a comprehensive export control compliance management system and workflow guidelines. Moore Thread stated that the company is currently actively communicating with all parties and evaluating the impact of this matter.