As the semiconductor dispute continues to rage, the US government is exploring the possibility of imposing more sanctions on China. However, several companies have highlighted the damaging effects of continued tightening of restrictions. The latest warning comes from Nvidia, which suggests that US industry may find itself unable to remain competitive with Chinese manufacturers in the semiconductor chip sector.
Nvidia's warning
- According to Nvidia, imposing export restrictions on products to China could lead to “lasting harm”.
- “We believe that the current regulation is achieving its intended results. Given the strength of demand for our products around the world, we do not anticipate that additional export restrictions on our data center GPUs, if adopted, would have an immediate material impact on our financial results,” Nvidia CFO Colette Kress said on the company’s earnings call on Wednesday (23).
- Therefore, the company advises not to increase pressure against the Chinese even further.
- “However, in the long term, restrictions prohibiting the sale of our data center GPUs to China, if implemented, will result in a permanent loss of an opportunity for the U.S. industry to compete and lead in one of the largest markets in the world,” she said.
- In June, the chipmaker had already indicated that the US semiconductor industry could suffer impacts from possible additional restrictions on exports of these products, according to reports from CNBC.
- China's contribution represents between 20% and 25% of Nvidia's revenue in its data center division, whose sales registered a remarkable growth of 171%, reaching a record milestone of US$ 10,32 billion, equivalent to more than R$ 50 billion, in the quarter ended in June 2023.
- Despite geopolitical pressures, the company's shares have surged more than 220% this year, with forecasts suggesting revenue growth could nearly triple by September.
Restrictions adopted by the USA
- While promoting domestic production, the US government seeks to limit China's access to products.
- Beijing faces restrictions not only on importing advanced chips, but also on obtaining resources to develop its own semiconductors and supercomputers, as well as U.S. components, technology and software for chipmaking equipment.
- US citizens are prohibited from supporting semiconductor production in China, whether through equipment maintenance, consulting or deliveries to Chinese manufacturers.
Importance of semiconductor chips
- In recent years, semiconductor chips have become a lifeblood of the modern economy and the brain of all electronic devices and systems, from iPhones to toasters, data centers and credit cards.
- A new car, for example, may have more than a thousand chips, each managing a different operation of the vehicle.
- Semiconductors are also the driving force behind innovations that promise to revolutionize life in the next century, such as quantum computing and artificial intelligence, such as ChatGPT, OpenAI.