China could face more chip restrictions in 2024, analysts say
A Chinese flag is displayed next to a “Made in China” sign seen on a printed circuit board with semiconductor chips, in this illustration picture taken February 17, 2023.
Florence Lo | Reuters
China could face more semiconductor export curbs from the likes of the U.S. and the Netherlands to contain the Asian powerhouse’s chip tech, analysts told CNBC.
Earlier this year, the Netherlands blocked Dutch semiconductor equipment maker ASML from exporting some of its deep ultraviolet lithography systems to China. ASML sells lithography machines that are key to manufacturing advanced chips.
It came after the U.S. tightened export controls on advanced semiconductors and chipmaking tools to China in October last year, building on previous rules. Washington is concerned that Beijing could use these advanced chips in artificial intelligence and military applications.
“I wouldn’t be surprised if there’s more [U.S. restrictions] coming just because we’re still in the middle of this tit-for-tat. And there’s a lot of hawks in the U.S. that are really concerned about China’s military buildup,” said Dan Hutcheson, vice chair and senior research fellow at TechInsights, on CNBC’s “Squawk Box Asia” Tuesday.
Beijing slammed the Dutch government’s move, urging the Netherlands to “uphold an objective and fair position and market principles.”
China’s Ministry of Commerce said last week that the U.S. is weaponizing export controls as a tool, adding that it is “highly concerned about the U.S.’s direct intervention” in the issue of high-tech exports by Dutch companies to China.
“It’s further evidence that not just the U.S. government, but also other Western countries like the Dutch government, are going to keep ratcheting up some of the restrictions that we’ve seen around both chipmaking equipment and also advanced semiconductors,” Chris Miller, author of “Chip War” told CNBC’s “Squawk Box Asia” in early January.
In October, the U.S. banned the sales of the A800 and H800 chips that Nvidia specifically manufactured for the Chinese market.
Nvidia’s less powerful A800 and H800 chips were developed after the U.S. government banned shipments of the A100 and H100 chips — which are advanced graphics processing units sold to businesses — to China in August 2022.
With [U.S.] elections impending and political tension continuing to exist in the Taiwan Strait, it’s hard to envision a meaningful pull back on restrictions. If anything, I see further tightening.
Daniel Newman
Principal analyst, Futurum Research
This led Nvidia to launch even less powerful chips in China in December to comply with U.S. export restrictions.
“The U.S. government has signaled that they’re planning to roll out new export controls that do close loopholes on a regular basis,” said Miller.
China’s imports of integrated circuits in 2023 plunged amid U.S. curbs, falling 15.4% year-on-year to $349.4 billion in 2023, according to customs data released on Friday (Jan. 12). Shipment volume also declined by 10.8%, the data showed.
“With [U.S.] elections impending and political tension continuing to exist in the Taiwan Strait, it’s hard to envision a meaningful pull back on restrictions. If anything, I see further tightening,” Daniel Newman, principal analyst at Futurum Research, told CNBC last week.
China opposes Taiwan independence and has urged the U.S. to “stop arming Taiwan,” according to a readout on Jan. 10.
China seeks self-reliance
Western efforts to contain China’s high-tech progress have pushed the economic giant to look to its domestic firms to be self-reliant.
Since 2019, the U.S. has slapped sanctions on Chinese tech firms such as Huawei and China’s largest chipmaker SMIC, forcing Beijing to boost its domestic industry.
Revenue of China’s top 10 chip-equipment makers surged 39% in the first half of 2023 compared to a year earlier, according to Shanghai-based CINNO Research.
“I do think the short-term provides an advantage to the West, but China will do everything in its power to be sure it isn’t left out of the chip race,” said Futurum’s Newman.
China has traditionally been dependent on foreign firms for critical components.
After the Dutch government revoked the export license of ASML, Beijing no longer has access to some of the most advanced chipmaking tools in the world.
China has also been barred from importing ASML’s extreme ultraviolet lithography machines, which companies like Taiwan’s TSMC need to make the smallest and most sophisticated chips.
Technology
Amazon was questioned by House China committee over ‘dangerous and unwise’ TikTok partnership
Amazon logo on a brick building exterior, San Francisco, California, August 20, 2024.
Smith Collection | Gado | Archive Photos | Getty Images
Amazon representatives met with the House China committee in recent months to discuss lawmaker concerns over the company’s partnership with TikTok, CNBC confirmed.
A spokesperson for the House Select Committee on the Chinese Communist Party confirmed the meeting, which centered on a shopping deal between Amazon and TikTok announced in August. The agreement allows users of TikTok, owned by China’s ByteDance, to link their account with Amazon and make purchases from the site without leaving TikTok.
“The Select Committee conveyed to Amazon that it is dangerous and unwise for Amazon to partner with TikTok given the grave national security threat the app poses,” the spokesperson said. The parties met in September, according to Bloomberg, which first reported the news.
Representatives from Amazon and TikTok did not immediately respond to CNBC’s request for comment.
TikTok’s future viability in the U.S. is uncertain. In April, President Joe Biden signed a law that requires ByteDance to sell TikTok by Jan. 19. If TikTok fails to cut ties with its parent company, app stores and internet hosting services would be prohibited from offering the app.
President-elect Donald Trump could rescue TikTok from a potential U.S. ban. He promised on the campaign trail that he would “save” TikTok, and said in a March interview with CNBC’s “Squawk Box” that “there’s a lot of good and there’s a lot of bad” with the app.
In his first administration, Trump had tried to implement a TikTok ban. He changed his stance around the time he met with billionaire Jeff Yass. The Republican megadonor’s trading firm, Susquehanna International Group, owns a 15% stake in ByteDance, while Yass has a 7% stake in the company, NBC and CNBC reported in March.
— CNBC’s Jonathan Vanian contributed to this report.
Technology
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Former U.S. Army intelligence analyst Chelsea Manning says censorship is still “a dominant threat,” advocating for a more decentralized internet to help better protect individuals online.
Her comments come amid ongoing tension linked to online safety rules, with some tech executives recently seeking to push back over content moderation concerns.
Speaking to CNBC’s Karen Tso at the Web Summit tech conference in Lisbon, Portugal, on Wednesday, Manning said that one way to ensure online privacy could be “decentralized identification,” which gives individuals the ability to control their own data.
“Censorship is a dominant threat. I think that it is a question of who’s doing the censoring, and what the purpose is — and also censorship in the 21st century is more about whether or not you’re boosted through like an algorithm, and how the fine-tuning of that seems to work,” Manning said.
“I think that social media and the monopolies of social media have sort of gotten us used to the fact that certain things that drive engagement will be attractive,” she added.
“One of the ways that we can sort of countervail that is to go back to the more decentralized and distribute the internet of the early ’90s, but make that available to more people.”
Nym Technologies Chief Security Officer Chelsea Manning at a press conference held with Nym Technologies CEO Harry Halpin in the Media Village to present NymVPN during the second day of Web Summit on November 13, 2024 in Lisbon, Portugal.
Horacio Villalobos | Getty Images News | Getty Images
Asked how tech companies could make money in such a scenario, Manning said there would have to be “a better social contract” put in place to determine how information is shared and accessed.
“One of the things about distributed or decentralized identification is that through encryption you’re able to sort of check the box yourself, instead of having to depend on the company to provide you with a check box or an accept here, you’re making that decision from a technical perspective,” Manning said.
‘No longer secrecy versus transparency’
Manning, who works as a security consultant at Nym Technologies, a company that specializes in online privacy and security, was convicted of espionage and other charges at a court-martial in 2013 for leaking a trove of secret military files to online media publisher WikiLeaks.
She was sentenced to 35 years in prison, but was later released in 2017, when former U.S. President Barack Obama commuted her sentence.
Asked to what extent the environment has changed for whistleblowers today, Manning said, “We’re at an interesting time because information is everywhere. We have more information than ever.”
She added, “Countries and governments no longer seem to invest the same amount of time and effort in hiding information and keeping secrets. What countries seem to be doing now is they seem to be spending more time and energy spreading misinformation and disinformation.”
Manning said the challenge for whistleblowers now is to sort through the information to understand what is verifiable and authentic.
“It’s no longer secrecy versus transparency,” she added.
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