Nvidia Corporation NVDA and Advanced Micro Devices, Inc. AMD announced earlier this month that the U.S. government has restricted artificial intelligence chip exports to China, triggering concerns among tech investors. A new report now suggests that more curbs could be announced next month.
What Happened: The Biden administration is contemplating a move to broaden restrictions on AI chip and semiconductor manufacturing equipment exports to China, and a decision in this regard could be announced as early as next month, Reuters reported.
The new regulations, according to the report, are based on restrictions communicated by the Commerce Department earlier this year to U.S. chip-equipment manufacturers KLA Corporation KLAC, Lam Research Corporation LRCX and Applied Materials, Inc. AMAT.
The government had previously asked these companies to obtain licenses for exporting to China chipmaking equipment that produces semiconductors with processor node technologies 14nm or less. The restrictions imposed on AI exports to China are also likely to be expanded, the report said.
Incremental regulations will include additional actions against China, Reuters reported, citing some of the sources. It, however, did not rule out the possibility of the restrictions being changed and/or published at a date later than expected.
Intel Corporation INTC and upstarts such as Cerebras Systems, which also target advanced computing markets, could be impacted too, it added.
The government may impose license requirements on products powered by the restricted chips, the report added. This would mean companies such as Dell Technologies Inc. DELL and Hewlett-Packard Enterprise Company HPE, which manufacture data centers using these chips, could face restrictions.
See also: 3 Dividend Plays To Watch in Semiconductors With The CHIPS Act As Law of The Land
Why It’s Important: The restrictive policy on China comes amid the U.S. government’s move to check China’s growth in technologies where the U.S. still maintains dominance, Reuters reported.
China is the leading player in chip assembly, packaging and testing, and is the fourth-ranked company in wafer fabrication, according to research by the Center for Strategic and International Studies, CNN said. COVID-19 disruptions impacted supplies from the region, pressuring U.S. tech companies.
Congress passed the CHIPS and Science Act of 2022 in July to bolster domestic design and manufacturing, protect national security, and reinvigorate the nation’s chip supply chain. It was enacted in early August.
Price Action: The iShares Semiconductor ETF (SOXX) closed Friday’s session 2.40% higher at $375.59, according to Benzinga Pro data.
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