A year after the Biden administration took its first major step toward restrict the sale of semiconductors to Chinahe began crafting additional limits aimed at depriving Beijing of technology essential to modern weapons.
But in recent months, its progress has been slowed as U.S. chipmakers reacted with a stark warning: Cutting their sales to China would gut their business and derail the administration’s plan to build new semiconductor factories. drivers in the United States.
Since July, Nvidia, Intel and Qualcomm, three of the world’s largest chipmakers, have argued that the crackdown on China would have unintended consequences. They challenged the White House’s wisdom on national security in meetings with officials like Secretary of State Antony J. Blinken and Commerce Secretary Gina M. Raimondo, courted think tanks and urged Washington leaders to reconsider additional controls on chips, according to interviews with two dozen officials. in government, industry and political organizations.
The companies have warned that a U.S. withdrawal could accelerate China’s development of an independent chip industry, paving the way for a world dominated by chips created in China rather than chips designed in the United States.
“What you risk is spurring the development of an ecosystem run by competitors,” said Tim Teter, Nvidia’s general counsel, who helped lead the lobbying campaign. “And this can have a very negative effect on American leadership in semiconductors, advanced technologies and AI. »
The campaign helped delay the implementation of new restrictions and narrow the list of changes the administration could make, two people familiar with the process said. But spokespeople for the Commerce Department and the National Security Council, which are leading the rulemaking process, said the agencies are committed to protecting sensitive technology.
“The timing and scope of export control decisions are carefully designed to have maximum impact,” said Sarah Weinstein, a spokeswoman for the Commerce Department.
The efforts by big chip companies have angered some national security experts, lawmakers and competitors in the semiconductor industry. Many favor a confrontation with Beijing and find it distasteful that companies questioned the White House shortly after the government committed $50 billion to the industry as part of the bill. CHIPS and Science Act. The 2022 measure provides funds to support U.S. chip manufacturing and counter China.
Rep. Mike Gallagher of Wisconsin, Republican chairman of a select committee on U.S.-China competition, discussed holding a hearing with chipmakers to question their compliance with export controls, officials said. said two people close to the conversations.
A spokesperson for Mr. Gallagher’s office did not respond to requests for comment.
The companies’ warnings speak to the tension between national security concerns and business interests and highlight an inevitable dilemma for the Biden administration: the economic interdependence of the United States and China, which has roots that go back decades away, means that any action by Washington to confront Beijing risks causing damage to its country.
China represents approximately a third of the global semiconductor market and more than $50 billion in combined annual revenue for Nvidia, Intel and Qualcomm. The companies have warned that losing that revenue could lead to reduced technology development, jobs and spending at semiconductor factories in Arizona, Ohio and New York.
Last year, the industry tacitly agreed to restrictions imposed by the administration on October 7, shortly after President Biden signed the agreement. CHIPS Act. Businesses have adjusted their operations. Nvidia developed a version of its iconic artificial intelligence chip, the H100, for China by reducing its performance power below the maximum levels allowed by the rules.
But the losses linked to the restrictions have multiplied. China has banned the sale of certain Micron Technology products, an American memory chip company. National security experts in Washington have identified gaps in these limits. And administration officials began to question whether Nvidia’s chip for China violated the spirit of the rules.
In July, industry executives were alarmed by rumors that the administration was about to expand its limits by banning Sales by Nvidia of the AI chip developed for Chinese use, among other changes. They feared the administration would also target Nvidia and Intel’s sales to affiliates of Inspur Group, a Chinese conglomerate with ties to the military, and Qualcomm’s sale of From 4G mobile chips to Chinese telecoms giant Huaweiwhich it had a special permit to supply, two industry executives said.
That month, three CEOs – Patrick Gelsinger of Intel, Jensen Huang of Nvidia and Cristiano Amon of Qualcomm – traveled to Washington to meet with the administration.
In meetings with Mr. Blinken, Ms. Raimondo and Jake Sullivan, Mr. Biden’s national security adviser, the business leaders highlighted the costs of losing access to China and warned that it could force the United States to cut spending, Mr. Gelsinger said. tell about the meeting at a security conference in Aspen, Colorado.
In conversations with White House officials, Intel officials also questioned whether National Security Council aides understood semiconductor technology, two sources familiar with the companies’ operations said.
An Intel spokesperson said it was “absolutely false” that the company had questioned security officials.
The companies also pressed their trade group, the Semiconductor Industry Association, to issue a statement criticizing the government’s restrictions. “broad, ambiguous and sometimes one-sided”. He warned that additional limits would harm “the competitiveness of the industry”.
When the statement was drafted, no association members spoke out against it, according to three people familiar with the process, but several members later said it made them uncomfortable because of support from the Biden administration to the CHIPS Act.
The Semiconductor Industry Association declined to comment.
The companies have also expanded their campaign to target think tank researchers. This summer, Mr. Huang met with leaders of organizations including the security-focused Center for Strategic and International Studies and the Atlantic Council.
Nvidia’s interest in think tanks sparked some concern, as word spread in Washington that the company had questioned the research of Gregory C. Allen, director of a center for advanced studies at CSIS which supports export restrictions, four of these people said.
Amid discussions between Nvidia and CSIS fundraising staff, several people from political circles, including Jason Matheny, the president of the RAND Corporation, called the center to express concerns that Nvidia was trying to ‘use his influence to marginalize Mr. Allen. said two people familiar with the calls.
John Hamre, CSIS’s executive director, assured Mr. Matheny and others that companies could not influence personnel decisions. In an email to the New York Times, Mr. Allen said: “He told me he was proud of my contribution to CSIS – he had just promoted me a few months earlier – and that he had absolutely no no intention of firing me now or in the future. the future.”
Ultimately, Nvidia donated $65,000 to CSIS, which represents less than 1% of annual donations, according to the think tank. He said Nvidia had not behaved “inappropriately.”
Mr. Teter, Nvidia’s general counsel, said the company had never challenged Mr. Allen’s work. “We are confident that it presents the best possible research and we totally respect that,” he said.
In addition to their meeting with the White House, the executives met with Eric Schmidt, former CEO and chairman of Google.
Since leaving his post as executive chairman of Google in 2018, Mr. Schmidt has become an influential player in Washington, serving on two Defense Department advisory committees and funding his own think tank, the Special Competitive Studies Project . He also supported the limitation China’s access to American-designed semiconductors.
In mid-July, Mr. Gelsinger, Mr. Amon and Mr. Huang spoke to Mr. Schmidt about the pitfalls of chip limits, two people briefed on the conversation said. Representatives for Mr. Schmidt declined to comment.
Last month, Mr. Schmidt’s think tank invited Mr. Gelsinger and Mr. Huang to give fireside chats at an annual conference in Washington on national security and technology. Neither leader responded to questions about restrictions on semiconductors and China.
