Analysts warn US could be handing crucial chip market to China

SAN FRANCISCO – As the Trump administration attempts to choke off exports of strategically important computer chips to China, experts say the effort might well backfire, fuelling innovation at Chinese firms that could help them seize the world semiconductor market.

“What’s actually happening is that the US government right now is handing China a big win as it tries to get their own chip business going,” said Mr Jack Gold, principal analyst at J. Gold associates.

“Once they’re competitive,” he warned, “they’ll start selling around the world, and people will buy their chips.”

When that happens, he added, it will be difficult for US chip makers to reclaim lost market share.

Silicon Valley semiconductor star Nvidia and its US rival Advanced Micro Devices (AMD) expect big financial hits from new US licensing requirements for semiconductors exported to China, they notified regulators this week.

Nvidia expects the new rules to cost it US$5.5 billion (S$7.2 billion),while AMD has forecast they could sap as much as US$800 million from the company’s bottom line, according to filings with the US Securities and Exchange Commission.

Administration officials told Nvidia it must obtain licences to export its H20 chips to China because of concerns they may be used in supercomputers there, the company said.

The United States has already restricted exports to China, the world’s biggest buyer of chips, of Nvidia’s most sophisticated graphics processing units (GPUs),designed to power top-end artificial intelligence models.

Nvidia essentially developed the H20 chip for the Chinese market, aiming to maximise performance while meeting previous US export rules, but the new licensing requirements pose a roadblock, according to Mr Gold.

For AMD, the new US export control measure applies to its MI308 GPUs, which are designed for high-performance applications like gaming and artificial intelligence, it said in a