Chip companies and US officials discuss China policy.

U.S. Chip‍ Company Executives Meet with Biden ‍Administration⁤ Officials to Discuss China ⁣Policy

By⁤ David Shepardson and Stephen Nellis

WASHINGTON ⁢(Reuters)‌ -U.S. chip‍ company executives ⁣met with ⁤top Biden​ administration⁣ officials⁣ on Monday ⁣to discuss China policy,⁤ the State Department and sources said, as the​ most‌ powerful semiconductor lobby group urged a halt to more curbs under consideration.


Secretary of State ‌Antony ​Blinken talked with chip company chief ‌executives ⁣about the industry and⁣ supply chains after his ‌recent trip to China, ​a department spokesperson told reporters. ‍

Commerce Secretary‌ Gina Raimondo, ⁣National ⁢Economic⁣ Council ⁤director Lael ‌Brainard ‍and National​ Security Council director ​Jake ‌Sullivan were among other government officials meeting with Intel, Qualcomm and ⁣Nvidia, a⁣ source ⁤familiar⁤ with the meetings told Reuters.

The chip industry is keen to protect its profits in China ⁤as‍ the⁣ Biden administration considers another round of ⁢restrictions on ⁢chip exports‌ to China.⁤ Last year, China‌ accounted ​for $180 ‌billion in semiconductor ⁢purchases, more than ⁢a third the worldwide total of $555.9 billion and⁢ the⁢ largest‍ single market, according ​to Semiconductor Industry⁤ Association (SIA).

Blinken sought‍ “to share his perspective on the ⁣industry​ and ⁤on supply chain issues, especially after his‌ recent visit to China” and​ “to hear directly from those ⁤companies‌ about ‌how they see supply chain ‍issues, ‍about how they see doing business ⁣in China,” State Department ⁢spokesperson Matthew Miller said ‍at a press briefing.

Discussions with ⁤government‍ officials also included speeding up⁢ disbursement ⁢of government money put aside for semiconductor firms in the CHIPS Act and making sure U.S. policy does not shut⁣ the ⁣chip firms out of ‌the lucrative Chinese market, ‍a second source‍ familiar with the⁢ matter ‌said. ‌

Commerce’s ⁢Raimondo is overseeing ‌the $39 billion CHIPS ‌Act semiconductor manufacturing subsidy⁢ program approved by ‌Congress last year. ​The law also created a 25% ⁤investment ‍tax credit‌ for‌ building chip plants, estimated to be​ worth ‍$24 billion.

The ⁣U.S. government is ⁢also focused ⁣on China’s⁤ access to the most sophisticated artificial intelligence chips,​ the ‌source ⁣added, saying Washington appears close to ‌tightening the ‌rules around ‍how much computing⁣ speed such chips could have but have not ​yet ⁤picked a specific threshold.

Earlier on Monday, the U.S.-based SIA called ⁢on the ⁤Biden ⁣administration to “refrain from‍ further restrictions” on chip sales to⁣ China and urged ⁣the ‍administration to ​allow “the industry to have continued ⁤access to ‌the China ‍market, the world’s⁤ largest commercial​ market⁢ for commodity semiconductors.”

The ⁢Biden ​administration ‌is ⁢considering updating ⁣a sweeping set of rules ‌imposed in October to hobble China’s chip​ industry and a‌ new executive‌ order restricting some outbound investment.

“Our actions have been carefully ⁤tailored to focus on‍ technology with national security implications, and designed to⁣ ensure that U.S. and allied technologies are⁤ not ⁣used to undermine our national security,” ‌a White House‌ National​ Security ⁤Council spokesperson said.

Not every official was expected to‌ meet​ with‌ every company,​ said the initial source, ‍who spoke ⁣on ⁤condition of anonymity.

The‌ Commerce ⁤Department and ⁤White House declined to comment on any potential discussions.

The meetings come after ‌China recently moved to ‌restrict ⁢exports of raw materials such as gallium and germanium ⁢that are used in ⁢making ⁢chips, something the ‌department⁣ spokesman said Blinken discussed in CEO ‌conversations.

Nvidia,⁤ Qualcomm⁤ and Intel have ⁢crucial⁢ sales riding on China. Qualcomm is⁢ the only company ‌with a license from U.S. ‌regulators ⁢to sell ‍mobile ⁤phone chips to Huawei ​Technology Co Ltd.

Nvidia is ​selling an AI ‌chip⁢ tweaked ‌for ‌the⁣ Chinese market ⁢that ⁢is already gaining traction among major Chinese ⁢firms, ‍and ⁢Intel Chief⁢ Executive​ Pat Gelsinger last week‍ traveled to China​ to​ announce ⁢its own AI‍ chip offering in⁣ China.

(Reporting by ​David Shepardson, Andrea Shalal and‌ Simon Lewis in Washington and Stephen Nellis in San FranciscoEditing by Chris Sanders, Susan Heavey, Matthew⁤ Lewis and ⁣Nick⁤ Zieminski)

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