US keeps chipping away at Dutch resistance on China

US keeps chipping away at Dutch resistance on China

Although the two countries’ leaders met in Washington on Tuesday, the United States and the Netherlands have yet to reached agreement on some possible new restrictions on exports to China.

After a face-to-face discussion with US President Joe Biden in the White House, Dutch Prime Minister Mark Rutte told Dutch TV program Nieuwsuur that he saw gradual progress in the discussions over the new chip ban on China.
It is important, Rutte acknowledged, that Western countries not lose their leading position in advanced semiconductor technologies and that advanced chips not be used for military purposes “in countries where you do not wish that to happen.”

But he added that older-generation technologies should not be disrupted by export restrictions.

The White House stuck to its position that all it’s about is friendly persuasion. “We don’t push any of our allies or our partners – we consult with them closely, and they make their own decisions,” White House press secretary Karine Jean-Pierre said in a media briefing on Tuesday, adding that the Biden administration would continue its efforts to persuade its allies over the matter.

Last Friday, Biden met with Japanese Prime Minister Fumio Kishida at the White House and discussed some joint efforts to restrict the exports of Japanese lithography tools to China. Neither Japan nor the Netherlands – both of which export DUV lithography to China – has yet announced a decision.

Media reports said Dutch’s ASML, the world’s largest chip-making tool supplier, continues to resist reduction of its shipments to China. 

On Tuesday, the US extended its chip exports ban to cover Macau. It said companies in Macau must obtain licenses to import US integrated circuits that have aggregate bidirectional transfer rates over all inputs and outputs of 600 gigabytes or more – in other words, chips equivalent to Nvidia’s A100 and H100 models.

The US said China-based firms also need licenses to purchase US digital processor units and “primitive computational units” that have speeds as great as 4,800 TOPS (tera-operations per second) – which refers to some supercomputing chips.  

The US announcement said the chips that had already been placed on the loading dock for export to Macau by Tuesday would not be affected by the new rules, so long as they were exported, re-exported or transferred in-country before February 16.

The order was given “because of Macau’s position as a special administrative region of China, and the potential risk of diversion of items subject to the Export Administration Regulations (EAR) from Macau to China,” Thea Dwosh Rozman Kendler, US assistant secretary of commerce for export administration, said in a statement.

“This rule adds Macau as a destination to which a license will be required to prevent the diversion to China of items determined to be critical to protecting US national security and foreign policy interests,” she added.

Nvidia and AMD

Last August, the US government ordered Nvidia and AMD to stop exporting their GPU and AI chips, as well as Nvidia’s AI server called DGX, to China and Russia. It explained to Nvidia that its A100 and H100 chips could be used in, or diverted to a “military end use” or “military end user” in the two countries. Nvidia said it did not sell products to customers in Russia.

At the same time, the US also restricted sales of AMD’s MI250 Accelerator AI chip to China.

On October 7, the US Commerce Department’s Bureau of Industry and Security (BIS) said Chinese companies on its “entity list” would be banned from obtaining certain advanced chips. It said the chip ban would cover mainland China and Hong Kong, but not Macau.

In late November 2022, Taiwanese Minister of Economic Affairs Wang Mei-hua said Nvidia was planning to relocate its Hong Kong-based logistics center to Taiwan. 

Wang did not give a timetable for the relocation but said Taipei would provide Nvidia some tax incentives.

Last month, media reports said AMD would also move its shipping facilities to Taiwan. Currently, AMD ships its products from Taiwan to Hong Kong for global customers.

Zhuhai’s AI sector

Some commentators said companies in Guangdong province would no longer be able to use Hong Kong and Macau to obtain high-end chips. They said the latest US’ move would hurt Macau’s neighbour, Zhuhai, which has in recent years vowed to boost its artificial intelligence industries.

Back in 2019, Shenzhen-based Tencent and Huawei had already set up their AI research centers and training facilities in Zhuhai’s Xiangzhou district. Media reports said trainees were learning how to apply AI technologies in drones.   

In October 2020, the Zhuhai government published a document about its plan to accelerate the development of Zhuhai’s semiconductor industry. It said the city would groom a group of fabless chip firms by 2025, two to three firms projected to generate annual income of 3 billion yuan (US$444 million). It also said the city would upgrade its AI sector and design more AI chips. 

Last August, the government said the industrial value-added of Zhuhai’s AI sector would exceed 120 billion yuan by 2025, representing one-fifth of the city’s gross domestic product. It said the AI designed by the city’s firms would be used in unmanned surface and underwater vehicles and robots for “rescue operations” at sea.

On December 15, Xiangzhou’s technology development bureau and the Shenzhen Artificial Intelligence Industry Association jointly held an event advertising how Zhuhai and Shenzhen could jointly develop AI technologies. 

Read: Chip war burns and churns as Biden presses Kishida

Follow Jeff Pao on Twitter at @jeffpao3