China’s Semiconductor Manufacturing International Corporation is expecting its fourth quarter revenue this year to drop by 13% to 15% due in part to new U.S. export controls, the company said in an earnings release last week. SMIC said the drop in revenue is because “customers need time to interpret the newly released US export control rules” and “due to the weak demand in the mobile phone and consumer market.” The new controls, announced by the Commerce Department last month (see 2210070049), will “have an adverse impact on our production and operation,” SMIC said. “We have maintained close communications with suppliers, while the clarification of some definitions in the new rules and the assessment of impact on the Company are still in progress.”
Chip export news
President Joe Biden and Chinese President Xi Jinping will meet in-person in Indonesia Nov. 14 to “discuss a range of regional and global issues,” the White House announced last week. The meeting will take place about a month after the U.S. announced new export licensing requirements designed to restrict China’s ability to acquire advanced computing chips and manufacture advanced semiconductors (see 2210070049).
The new U.S. chip controls against China (see 2210070049 and 2211010042) mark a “major escalation” in the U.S.-China technology war and will likely have a significant effect on China’s technology capabilities, Bank of America said this week. The bank also warned that the controls, which are “more comprehensive and stricter than what we have seen in the past,” could ultimately open the “door to more sweeping restrictions in other domains like leading edge manufacturing.”
U.S. semiconductor company Nvidia is offering a new advanced chip to Chinese customers that complies with the Commerce Department’s new export restrictions (see 2210070049), a company spokesperson said Nov. 8. The person said Nvidia's new A800 chip, which recently went into production, is designed to meet U.S. licensing requirements. "The NVIDIA A800 GPU, which went into production in Q3, is another alternative product to the NVIDIA A100 GPU for customers in China," the spokesperson said in a Nov. 8 email. "The A800 meets the U.S. Government’s clear test for reduced export control and cannot be programmed to exceed it." The spokesperson declined to say if Nvidia had confirmed with Commerce whether the chip complies with U.S. export regulations. Reuters first reported the new chip.
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As U.S. chip and technology companies continue to grapple with the U.S’s latest export restrictions on China (see 2211010042), a number of firms fear the controls will hurt their sales and exacerbate uncertainty in the semiconductor sector and the industry’s supply chains. In filings with the Securities & Exchange Commission this month, at least one firm projected revenue losses while others said they are still assessing the impact of the complex controls and whether they can secure export licenses.
The semiconductor industry was disappointed the new U.S. export control rules involving China weren’t imposed multilaterally and were frustrated by the Commerce Department’s lack of engagement before the rules were announced, a chip industry executive said. Semiconductor companies also have received mixed messages from Commerce about how long it could take to convince allies to impose similar controls, a China technology expert said, and fear that China could retaliate before allies are brought on board.
Beijing-based lawyer Robert Lewis and Lexology on Nov. 3 published a summary and an outline of a recent Chinese webinar on the new U.S. semiconductor and advanced computing export controls (see 2210070049). The webinar, hosted by Chinese law firm Chance Bridge and Renmin University last month, discussed strategies for Chinese companies to manage the new restrictions. Speakers discussed how the new controls differ from restrictions placed on Huawei, what types of technology are subject to the new restrictions, how Chinese companies can work around the controls and more.
Chinese technology companies are “scrambling” to hire engineers from foreign companies that are closing their business in China due to new U.S. export controls (see 2210070049), Nikkei reported Nov. 4. The report said Huawei, Alibaba and other chip developers issued job postings after they learned U.S. chipmaker Marvell planned to lay off hundreds of workers in China. Some Chinese companies are offering to pay a higher-than-expected salary for these workers because “chip talent has never been in more demand and competition for hiring is intense,” a Chengdu-based recruiter told Nikkei.
U.S. chip companies may need to wait as long as nine months before the U.S. can come to an agreement with allies on multilateral China chip controls, Bloomberg reported Nov. 3. Commerce Secretary Gina Raimondo, speaking last week to Lam Research, KLA and other chip companies, said the U.S. is working on an agreement with the Netherlands and Japan, but such a deal could take six to nine months, the report said.