us tightens grip on china's semiconductor access
Washington D.C., Friday, 10 January 2025.
The United States Department of Commerce has announced new regulations that further limit China’s access to certain semiconductor technologies. These measures could impact major companies like TSMC and ASML, which have significant dealings in Chinese markets. The Biden administration is reportedly considering expanding these controls to include advanced AI chips and extending them to 16nm processes. This move could create challenges for foundries relying on Chinese orders. Investors are urged to consider potential geopolitical tensions that may affect the semiconductor supply chain. The new regulations aim to restrict access to advanced technologies for countries like China and Russia. A three-tier system of chip trade limitations is under consideration, potentially impacting U.S. chip giants like NVIDIA and AMD. The semiconductor industry faces unprecedented challenges as these restrictions are anticipated to be tightened before President Biden’s term ends.
Market reaction and immediate impact
The announcement triggered significant market turbulence, with major semiconductor stocks experiencing sharp declines on January 10, 2025. NVIDIA saw its stock drop by more than 3%, while AMD fell nearly 6%, and Broadcom declined over 2% [3][4]. The proposed restrictions would create a three-tier system where only select U.S. allies would retain full access to American semiconductors, while most countries would face new limitations [3].
Industry pushback
NVIDIA’s Vice President Ned Finkle strongly criticized the proposed regulations, arguing they would harm the U.S. economy and push global markets toward alternative technologies [2][3]. The Semiconductor Industry Association (SIA) expressed deep concern about the unprecedented scope and complexity of the potential regulations [3]. The Information Technology Industry Council (ITIC), representing tech giants like Amazon, Microsoft, and Meta, warned the rules could force U.S. companies to surrender global market share to competitors [3].
Technical implications
The new restrictions may extend to 16nm processes, expanding from the current 7nm controls [1]. This could significantly impact companies like TSMC, where 16nm processes account for approximately 8% of revenue [1]. The regulations would particularly affect AI chip manufacturing and distribution, with the Biden administration considering implementing a global framework for AI chip sales limitations [1].
Timing and implementation concerns
Industry leaders are particularly concerned about the timing of these regulations, coming at the end of Biden’s term. The SIA has urged the administration to either issue a proposed rule or transfer the policy-making process to the incoming Trump administration [3][4]. This would allow for proper consultation with industry leaders and global partners to address this critical issue more thoughtfully [3].