The US chip industry may suffer if it imposes more restrictions on China

Major chipmakers warn that export restrictions aimed at China will affect America's leading position.

In a meeting with White House officials this week, Intel CEO Pat Gelsinger, Nvidia CEO Jensen Huang and Qualcomm chief Cristiano Amon argued that export controls could hurt America's lead in the industry.

According to Bloomberg , US President Joe Biden administration officials listened to these statements but did not make any commitments.

The US semiconductor industry is looking to stay afloat amid escalating tensions between the US and China. Washington's national security restrictions have prevented many businesses from supplying their largest market. Meanwhile, the Biden administration is looking for solutions to increase the ban, including chip models being developed by Nvidia specifically for the Chinese market.

Representatives for the three companies and a spokesman for the US National Security Council declined to comment.

Card with Nvidia H100 chip. Photo: Serve The Home

US National Security Adviser Jake Sullivan on July 21 expressed agreement with technology leaders, that Washington's approach needs to be effective at a limited scale.

During a discussion in Washington, D.C. CEO Gelsinger said imposing more restrictions could threaten Biden's goal of bringing chip factories back to the United States. Without orders from China, Intel would not have the need to implement projects like the factory complex in Ohio. Meanwhile, the boss of Nvidia warned that blocking the sale of some chips to China would only make alternatives more popular.

According to all three semiconductor tycoons, Chinese companies have bought more chips to fill the void of products banned from export, so their growth rate has not been affected. The quality and availability of the software also helps them overcome hardware limitations.

"We've sent an important message on the issue with China. China accounts for 25-30% of semiconductor exports. If the market declines by 20-30%, we won't need to build more factories," Gelsinger said at the Aspen Security Forum in Washington on July 21.

Intel CEO said that the US government should allow companies to continue selling chips to China. Revenue from it will fund research and development, helping to maintain America's leadership in new technologies like quantum computing.

Gelsinger earlier this month traveled to Beijing to introduce the latest line of AI chips from Intel, claiming that China is the company's highest sales region with 25% of revenue. Meanwhile, 60% of Qualcomm's revenue comes from China, thanks to supplying components to smartphone manufacturers like Xiaomi. This figure for Nvidia is 20%.

US officials are considering tightening export regulations with high-performance chips and semiconductors for Chinese companies like Huawei. The new regulation is said to have the strongest impact on Intel and Qualcomm. Nvidia could also take a big hit as its leadership in AI chips helped make it a company worth more than $1 trillion earlier this year.