National Economic Council Director Lael Brainard and National Security Adviser Jake Sullivan are joining a White House meeting Monday with the chief executive officers of America’s largest semiconductor makers to hear their concerns over new restrictions that threaten sales to China.
The inclusion of senior administration officials in the meeting highlights the pressure the Biden administration is facing from chipmakers, who worry new restrictions on sales of them and related equipment to China will cut them off from their largest market and ultimately undermine US leadership in the industry.
Brainard and Sullivan, along with other officials, will sit down with the leaders of Intel Corp., Nvidia Corp. and Qualcomm Inc., companies that have lobbied forcefully against the new curbs.
Nvidia and Qualcomm declined to comment about Monday’s meeting, while Intel didn’t immediately respond to requests for comment. The White House also did not immediately respond to a request for comment.
The US, where most of the chip technology originates, believes restricting China’s access will bolster national security and hold back Beijing’s efforts to advance its military capabilities. The Biden administration is set to roll out new restrictions in the coming weeks, people familiar with the matter said. The administration aims to update and finalize the measures by strengthening what’s already been announced.
The Commerce Department in October issued rules that bar semiconductor equipment makers from selling certain tools to China, as well as prohibit the export of some chips used in artificial intelligence applications — an announcement that roiled the industry.
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The Semiconductor Industry Association said Monday that “overly broad, ambiguous and at times unilateral restrictions risk diminishing the US semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty and prompting continued escalatory retaliation by China.”
A National Security Council spokesperson, in response to SIA, said the administration’s “actions have been carefully tailored to focus on technology with national security implications, and designed to ensure that US and allied technologies are not used to undermine our national security.”
“We have been deliberate about getting this right, including through extensive public comment on regulations, and through intensive coordination with allies and partners, the Hill, industry, and other stakeholders,” the spokesperson said.
Qualcomm gets more than 60% of its revenue from the China region, where it supplies components to smartphone makers such as Xiaomi Corp. Intel CEO Pat Gelsinger, who visited Beijing earlier this month to show off his company’s latest artificial intelligence chips, counts the nation as his biggest sales region, with China providing about a quarter of its sales. For Nvidia, run by co-founder and CEO Jensen Huang, China provides about a fifth of revenue.
So far, chip equipment makers such as Applied Materials Inc. have taken the biggest hits to revenue, being forced to knock billions of dollars off their projections. But the restrictions, which companies fear will be extended to other classes of chips, are also affecting some device makers. Nvidia’s ability to ship its industry-leading artificial intelligence accelerators to China has been curbed by an approval process, costing it sales.
The US is using some of its powers to influence overseas companies to further cut off China’s access. ASML Holding NV, one of the biggest providers of chipmaking equipment, is facing tighter restrictions from its home government in the Netherlands and new restrictions from the US, because some of its components are made in America.
In its statement Monday, the Semiconductor Industry Association called on the US and Chinese governments “to ease tensions and seek solutions through dialogue, not further escalation.”
(Updates with backround, details throughout)
