AI Chip Exports: The New Battleground in the US-China Tech War
When a Wall Street strategist starts using phrases like “geopolitical economic warfare,”it’s time to sit up and take notice. The rumblings in the tech sector about potential new US restrictions on AI chip exports to China are no longer just about trade. They’ve morphed into a full-blown, high-stakes tech war.
Silicon Chess: The New Frontier
The whispers suggest the US Commerce Department could drop the hammer on exports of the most advanced semiconductors with artificial intelligence capabilities. Now, this isn’t just about curbing economic growth. It’s also about putting a leash on the military AI advancements of the Red Dragon. As Ted Mortonson, technology desk sector strategist at Baird, pointed out on Yahoo Finance, it’s a “new frontier”we’re talking about here.
The term “economic sovereignty”was thrown around quite a bit. When you start messing with that, you’re crossing a big, red line, especially for China.
Not Just a Chip Off the Old Block
We’re not just talking about putting a few restrictions on top of the ones announced last year on machinery for making advanced chip technologies. Nor are we only referring to Nvidia’s A100 and H100 circuits used for deep generative AI loads.
What we’re dealing with here is a potential economic policy shift to keep our most advanced silicon technology out of China’s grasp. As Mortonson puts it, “Nobody knows how deep these [restrictions] are going to go.”
A Burning Industry Amidst the Frosty Air
Despite the icy economic relations, the semiconductor industry has been smokin’ hot this year, thanks to the hype over AI. Investors have been flocking to names like Nvidia and AMD like seagulls on a chip. But on Wednesday, both stocks dipped slightly.
China represents a whopping 25% to 30% of total revenue exposure for both Nvidia and AMD, according to Mortonson. So, new restrictions? They’d hit these companies like a headwind on the core growth front.
A Game of Tit-for-Tat?
It’s still hazy how China would react to these new restrictions. But, as Mortonson warns, investors should brace themselves for a possible retaliatory move from Beijing against US companies.
China controls a massive chunk of the supply of other products into the US. They’re not going to sit idly by while the US throws punches in the tech arena. Watch this space – the Dragon may just strike back at some of our big businesses.
So, folks, buckle up. We’re in for a wild ride in this high-stakes game of tech chess.
