US commerce secretary Gina Raimondo delivered a speech warning chip-manufacturing companies to stay in line and avoid exports to China.
The fight for chip manufacturing between the United States and China continues to intensify, with US Commerce Secretary Gina Raimondo cracking down on companies avoiding regulations.
At the Reagan National Defense Forum in California, Raimondo gave a speech saying the US was going to deny China its most cutting-edge chip technology.
“We cannot let China get these chips. Period,” Raimondo said.
She also warned against US companies trying to work their way around these controls. If any corporation designs a new chip that avoids regulations, she promised to place it under control the day after its announcement.
This was a clear reference to NVIDIA, the world’s largest chip designer whose second-biggest market is China. NVIDIA had an overwhelmingly positive year thanks to its new chips designed for AI software development.
NVIDIA has a history of going around US regulations. When, in August 2022, the US imposed restrictions on A100/H100 sales to China, NVIDIA responded with the A800/H800, two products with just the right characteristics to be sold to Beijing. When, in October 2023, the US restricted those chips too, NVIDIA launched the new H20 chip the month after.
It seems that NVIDIA is always one step ahead of the US regulators, although that may go against their interests in the long term.
The Microchip War explained
Microchips (also known as semiconductors) are crucial components of electronic and digital products, as well as cutting-edge military equipment. They quickly became one of the new lungs of the global economy.
American corporations like NVIDIA and Apple design their chips in the US but outsource their manufacturing in East-Asian countries. In particular, the vast majority of chips are manufactured in Taiwan.
Taiwan is considered by Beijing as a rebel province. Mainland China has made great strides to promise an invasion of Taiwan, which is also a staunch American ally.
However, the geopolitics of semiconductors prevents a Chinese invasion of Taiwan. As long as Taiwan manufactures the world’s most advanced chips, it can be considered safe from Chinese invasion.
This is why the United States, who vocally promised the protection of Taiwan, is trying to keep China away from its chips. Beijing relies on Taiwan-made chips for its electronics and military equipment, much like the rest of the world. A Chinese invasion would disrupt this trade.
China went to great lengths to match Taiwan’s chip manufacturing capability. But while the gap is shortening, it still remains several years behind. A distance the US would like to preserve.
