October 2, 2023

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Chip companies and senior US officials discuss China policy

U.S. chip company executives met with top Biden administration officials on Monday to discuss China policy, the State Department and sources said, as the most powerful semiconductor lobby group urged a halt to further restrictions under consideration.

Secretary of State Antony Blinken spoke with CEOs of chip companies about the industry and supply chains after his recent trip to China, a department spokesperson told reporters.

Commerce Secretary Gina Raimondo, National Economic Council Director Lyle Brainard, and National Security Council Director Jake Sullivan were among the other government officials who met with Intel (INTC.O), Qualcomm (QCOM.O), and Nvidia (NVDA.O), which is A source familiar with the meetings told Reuters.

The chip industry is keen to protect its profits in China as the Biden administration considers another round of restrictions on chip exports to China. Last year, China accounted for $180 billion in semiconductor purchases, more than a third of the global total of $555.9 billion and the largest single market, according to the Semiconductor Industry Association (SIA).

Blinken sought “to share his view on the industry and supply chain issues, especially after his recent visit to China” and “to hear directly from those companies about how they view supply chain issues, about how they view doing business in China,” State Department spokesman Matthew Miller said in a statement. Press Conference.

Discussions with government officials also included expediting the disbursement of government funds set aside for semiconductor companies in the CHIPS Act and making sure that US policy does not lock chip companies out of the lucrative Chinese market, said a second source familiar with the matter.

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Raymondo Commerce oversees the $39 billion CHIPS Act semiconductor manufacturing support program that Congress approved last year. The law also created a 25% investment tax credit for building chip factories, valued at about $24 billion.

The US government is also focused on China’s access to the most advanced AI chips, the source added, saying Washington appears close to tightening rules about how much computing speed these chips can have but has yet to set a specific threshold.

Earlier on Monday, the US-based SIA called on the Biden administration to “refrain from further restrictions” on chip sales to China and urged the administration to allow “industry continued access to the Chinese market, the world’s largest commercial commodity semiconductor market”.

The Biden administration is considering updating a sweeping set of rules imposed in October to hamper China’s chip industry and a new executive order restricting some foreign investment.

“Our actions are carefully designed to focus on technology that has national security implications, and are designed to ensure that U.S. and allied technologies are not used to undermine our national security,” said a White House National Security Council spokesperson.

Not every official is expected to meet with every company, said the initial source, who spoke on condition of anonymity.

The Commerce Department and the White House declined to comment on any possible discussions.

The meetings come after China recently moved to restrict exports of raw materials such as gallium and germanium that are used to make chips, something a ministry spokesperson said Blinken discussed in talks with the CEO.

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Nvidia, Qualcomm and Intel all have significant sales in China. Qualcomm is the only company authorized by US regulators to sell mobile chips to Huawei Technology Co Ltd (HWT.UL).

Nvidia is selling a modified AI chip for the Chinese market that is already gaining traction among major Chinese companies, and last week Intel CEO Pat Gelsinger traveled to China to announce the showcasing of its AI chips in China.

(Covering) By David Shepherdson, Andrea Schalal, and Simon Lewis in Washington, and Stephen Nelis in San Francisco Editing by Chris Sanders, Susan Heavy, Matthew Lewis, and Nick Zieminski

Our standards: Thomson Reuters Trust Principles.