In a confidential communication addressed to President Biden, semiconductor industry associations express strong disapproval of the forthcoming export regulations.

Just a few days prior to Joe Biden's departure from the White House.

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Several trade organizations including the Semiconductor Industry Association (SIA) and Semiconductor Equipment Materials International, have written a letter to outgoing U.S. President Joe Biden, raising concerns about new U.S. export controls, reports Reuters. The organizations, which represent chip developers, as well as producers of chipmaking tools, criticized the lack of industry consultation regarding regulations restricting the global use of American processors for AI. 

The letter comes after the Biden administration introduced a three-tier licensing system for U.S. made AI processors (such as Nvidia's H100 or B200 GPUs), requiring most countries to obtain licenses. High-bandwidth memory (HBM), essential for AI GPUs and ASICs, is also set to face stricter export restrictions, especially for sales to China. These changes could have significant impact on U.S. companies like AMD, Broadcom, Intel, Nvidia, and Micron, as well as the global semiconductor market. Nvidia has heavily condemned the decision.

Trade associations cautioned that the newly imposed restrictions might negatively impact U.S. businesses and allow international rivals to gain market share. They highlighted the lack of substantial dialogue and public input regarding these economically impactful regulations. The organizations called on the administration to rethink the rules, underscoring their potential long-term consequences. 

Sales to China constitute a substantial portion of revenue for AMD, Intel, and Nvidia. With the implementation of new export regulations, these companies will find it nearly impossible to sell their AI processors to Tier 3 nations, including Belarus, China, Iran, Macau, Russia, and other countries under arms embargoes, which will significantly impact their sales figures. Meanwhile, China has developed its own AI processors, like Huawei's Ascend 900 series. Although these might not match the speed of Nvidia's H20 HGX, they could still suffice for creating high-performance clusters for AI training. Furthermore, China could potentially export these processors to other restricted nations, undermining Nvidia's stronghold in the AI market. Additionally, due to these restrictions, some Tier 2 countries might intensify their initiatives to develop independent processors for AI and high-performance computing (HPC) using open-source technologies like RISC-V, which could threaten the market dominance of all American firms, including AMD, Intel, and Nvidia. 

Furthermore, the new regulations may overturn a previous interpretation that was advantageous for American manufacturers of wafer fabrication machinery, including companies like Applied Materials, KLA, and Lam Research. These firms have made billions by supplying their equipment to Chinese producers of 3D NAND, DRAM, and logic chips. A reversal in this interpretation could have a substantial effect on their earnings. 

According to Reuters, neither Lam Research nor the trade associations provided any comments in response to the inquiries.