The White House has imposed new restrictions in the name of national security, through the powerful Bureau of Industry and Security (BIS), in charge of establishing export controls, on chip sales to certain countries about which there are indications. that they can transfer to China the high technology contained in their integrated circuits.
The measure is already in contention, say anonymous sources familiar with the BIS decision, who specifically point to Saudi Arabia and the United Arab Emirates (UAE) as the first foreign markets in the spotlight. These countries have a strong appetite to attract foreign investments for their hubs of Big Data and Artificial Intelligence (AI) and for its close connection to the BRICS + and more specifically to the Chinese theses that seek to snatch the technological, economic, military and geopolitical world scepter from the US.
Department of Commerce officials confirmed to Bloomberg that this regulation has been in force since August and that the deliberations to incorporate new restrictions before the November 5 election remain fluid. Always under the threat of safeguarding economic interests and national security and to prevent the know-how of chip companies fall into the hands of their great geostrategic enemy.
The BIS decision involves reconfiguring the foreign licensing scheme under its jurisdiction over semiconductors and artificial intelligence (AI) with control of the first maritime charges to prevent Saudi and UAE data centers from collecting material that qualifies as top industrial secret.
Meanwhile, determines the final blacklist of foreign markets banned from acquiring AI chips made in US. Nvidia, leader of the sector, which starred in a double in July surprise to Apple and Microsoft by exceeding three trillion dollars in market capitalization – just 100 days after registering two trillion – the also Californian AMD (Advanced Micro Devices) and the sector’s historic company, Intel – all of them, specialized in processors for AI – have been affected by restrictions.
The Biden-Trump clamp against Chinese technology
The Biden Administration has had no qualms about staging the first rehearsal of technology in the technology business. decoupling of globalization. It already demonstrated this in 2022, with the prohibition of its foreign sector from sending technological innovation products to the asian giant. In 2023, by vetoing the sale of microchips made in US. Or this summer, with the unprecedented increase in import tariffs on a wide range of Chinese goods, which were intended to stop the sale of their electric vehicles in the American market: from a doubling of entry tariffs on the cars themselves, to unparalleled tolls on their batteries, their rare minerals and chips.
North American diplomatic sources recognize that Biden’s initiatives try to prohibit crucial elements in the manufacturing of the competitive Chinese electric vehicle, from integrated circuits to software, and that it could raise these barriers to technical components both from the second global economy and of Russian origin due to their use in the preparation of automatic driving and communication systems in utility vehicles.
Again, under the hackneyed argument that they could spy for Beijing or Moscow and for the sake of national security. Although the instigator of these protectionist practices was his predecessor.
Donald Trump’s economic policy established the tariff battle with Beijing and made official, in 2018, the first controls on its technology firms – from Huawei to ZTE, its telecommunications giant – in US territory. Now that he is seeking to return to the Oval Office, “he continues to see enemies on all sides,” analysts say. Bloomberg after the Republican’s interview with his editor in chief, John Micklethwait, in which he attacked the experts who risk transferring the costs of his aggressive trade policies to the American consumer and companies.
Trump’s strategy also triggered the hostilities of both superpowers for the technological throne, which has intensified in the midst of the race for AI hegemony and where chips play a prominent role on the chessboard of the new world order. The White House does not hide its attempts to involve its European allies in the battle so that its commercial sabotage of China is effective, even in businesses with a special geostrategic background such as 5G and 6G.
The Biden Administration has given another turn of the screw to the embargo crank. To the point of contributing to the decline in the stock market shares of chip multinationals. Both from Nvidia, which has not done well at all with its reign as the most valuable company on Wall Street, and from its American, European and global competitors. Because Washington’s veto has triggered a strong reaction in the markets. Between last Tuesday and Wednesday, $420 billion was eroded from chip firms worldwide, including corrections in the US, Europe and Asia.
Of course, it was not the only factor. Perhaps the biggest trigger for this debacle was the magnitude of the decline in chip orders from the Dutch company ASML in the third quarter – from the expected 5,390 million euros to 2,600 million -, which caused a 15.6% drop in its value. . The largest in its 26 years of history, a flight of more than 50,000 million, the largest in Europe since 1998 and which has caused it to cede its status as the largest European company by capitalization to the German software emporium SAP.
Chips and AI will create volatility in the stock markets
The IMF, in the run-up to its autumn summit, has warned that “AI can make the market more efficient, but also more volatile” in the immediate future. In his diagnosis, which will appear in his report on Financial Stability, he leaves an eloquent double reading: “hedge fundsinvestment banks and other market firms […] “They use algorithms to streamline stock orders and market their assets more effectively, but AI is also helping to precipitate adverse events that sink prices in short periods of time.” The fear of severe destabilizing episodes and corporate or financial uncertainties will increase volatility and generate roller coasters in stock valuations, he clarifies.
He profit warning that the Dutch firm ASML announced this week caused a sharp drop in its stock market value that dragged down other values in the sector. TSMC illustrates the full part of the bottle that has turned chips into stock market El Dorado. Faced with the loss of investor confidence by ASML, the Taiwanese company reports net income of 54% between July and September and its intention to create chip plants in Europe to supply its technology firms. TSMC is also Nvidia’s main component supplier.
The Taiwanese firm is under pressure for being one of the beneficiaries of the millionaire federal subsidies to the country’s industries. Specifically, it has already received $11.6 billion in guarantees, loans and direct aid since they came into effect in 2023, and has begun producing its A16 chips for Apple from its Phoenix factory.
But the empty part also exists and has to do with the warning from investment banks like Goldman Sachs that calls into question the reality of a business, that of AI, that is capable of exploding global productivity and absorbing return quotas. of benefits that exceed one billion dollars.
New geopolitical tensions
The White House National Security Council (NSC) admitted off the record that its objectives are to put an end to “the tremendous potential of advancement in AI of certain nations and their ambitious interests in hosting data centers” and that Nvidia and AMD have already suspended charges to more than 40 markets in the Middle East, Asia and Africa, for enter the “protection umbrella” of the American high-end chip industry, responsible for “mitigating emerging technological risks.” Tarun Chhabra, its Director of Innovation, was encouraged to acknowledge “conversations with several countries” to reduce China’s “access capabilities” to cutting-edge US technology that “it could use in the military field.”
Data centers, highly demanded by AI for its development, are the other large speculative niche, along with chips, that the IMF says it fears.
The UAE and Saudi Arabia have taken technological leadership in the Middle East to reduce their high dependence on crude oil. But, despite choosing the US as their major strategic partner, they have entered into separate agreements with China to develop value chains focused on Big Data and AI with technology from the Asian giant; especially with Lenovo.
The warning from Eric Schmidt, former CEO of Google, that “the US is not prepared to defend itself or compete in the age of AI” with adversaries like China has once again come to the fore in the Oval Office. Just like the slogan of George Friedman, of Geopolitical Futures, that technological cycles incite geopolitical changes in the world order.
Although TSMC is also under Washington’s scrutiny. At the expense of the company revealing the markets to which its investments will flow in Europe, the White House places its sights on Hungary and Slovakia, which admit to negotiating with Russia and China energy projects and technological cooperation pacts – the former, with Moscow, the latter, with Beijing – to reduce, as they claim, their dependence on the internal market. Two of the Trojan horses of the Kremlin in the EU, they warn in Washington. For now, the Taiwanese multinational has placed its first European pike in Dresden.
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