China’s chipmakers to see big fallout from Biden’s ‘last dance’ – Jefferies By Investing.com
Investing.com– Jefferies expects a major negative impact on China’s chip industry from the Biden administration’s latest round of export controls on the sector — one of the last policies under President Joe Biden before the upcoming regime change.
Biden’s latest round of export restrictions — which will block advanced foundries like TSMC (NYSE: ) and Samsung Electronics Co Ltd (KS:) from making artificial intelligence chips for China – described by Jefferies analysts as a “very tough control measure.”
Chinese companies will now have to undertake extensive documentation and approval processes to order chips from US-linked foundries, which presents the possibility of outright rejection or a prolonged ordering process.
Jefferies said the move would have a “huge negative impact” on China’s GPU/AI ASIC players, as TSMC and Samsung – which have the world’s most advanced foundries – will not be able to produce chips for the sector.
Although removing specifications is an option – ie. running AI chips with fewer transistors — that will make the product less useful, Jefferies said.
For ADAS/AD players, Jefferies said the impact is less clear, given the limited information on transistor counts in the sector. But the new regulations could prevent the sector from advancing technology, putting it at a disadvantage against overseas rivals such as NVIDIA Corporation (NASDAQ: ) and Qualcomm Incorporated (NASDAQ: ) .
The restrictions, introduced this week, cap a series of measures the Biden administration has introduced against China to largely block its access to the fast-growing artificial intelligence industry. President-elect Donald Trump seems likely to keep the restrictions in place, given that he has signaled a largely hostile stance toward China.
Still, Chinese chip stocks rallied on Friday, amid persistent bets that major local foundries such as Semiconductor Manufacturing International Corp (HK: ) will benefit from increased local demand. China has also launched an investigation into US chipmakers over subsidies under the CHIPS Act, as well as allegations of dumping.
