A leading executive in the semiconductor industry warned that the United States's restrictions on Chinese chips could do long-lasting harm to American companies.
Nvidia CEO Jensen Huang said that the growing number of export controls put on Chinese products by the Commerce Department could hurt the U.S. tech industry. The export controls have been the latest and most aggressive effort by the U.S. government to rein in Chinese innovation with the intent of ensuring that they are unable to use the chips in high-grade military equipment.
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Huang argued the opposite, saying that limiting Chinese access to U.S. chips means they'll be forced to develop their own.
“If [China] can’t buy from ... the United States, they’ll just build it themselves,” Huang told the Financial Times. “So the U.S. has to be careful. China is a very important market for the technology industry.”
"If we are deprived of the Chinese market, we don’t have a contingency for that. There is no other China; there is only one China," Huang added. He also said that it would cause "enormous damage to American companies" to lose access to the Chinese marketplace. He said that restricting U.S. access to the Chinese market would “cut the Chips Act off at the knee," a reference to the CHIPS Act, which gave President Joe Biden $52 billion in funding designed to encourage additional chip manufacturing within the states.
Huang's remarks come after the latest series of blows between the two countries' regulators. Chinese authorities announced a ban on Monday on the U.S. chipmaker Micron installing its products into key parts of Chinese infrastructure due to alleged security risks. It's the first reciprocation by the Chinese government for export controls the Commerce Department implemented last fall, a motion China is attempting to challenge in the World Trade Organization.
Nvidia has become one of the most prominent players in the chip industry.
The company's market capitalization recently rose to a staggering $770 billion, a significant difference when compared to its rivals, Intel or Qualcomm. The only comparable competitor at this time is the Taiwan-based TSMC, whose market capitalization is $450 billion. The surge in capitalization coincides with the growing need for the hardware required to support artificial intelligence-powered software.
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The Chinese government has also cut back on government funding for improving chip manufacturing, which could slow the country's ability to keep up with the U.S. in chip development.
U.S. factories are also competing to get access to CHIPS Act funding. Commerce Secretary Gina Raimondo announced on Thursday that the United States would construct at least two new semiconductor factory hubs with the money provided by CHIPs.