Chip companies, top US officials discuss China policy

WASHINGTON, July 17 (Reuters) – Leaders of U.S. chip companies 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 to halt more curbs under consideration.

Foreign Minister Antony Blinken spoke to chip company bosses about the industry and supply chains after his latest 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 ( INTC.O ), Qualcomm ( QCOM.O ) and Nvidia ( NVDA.O ), a source familiar with with It told the meetings to 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 of the worldwide total of $555.9 billion and the largest single market, according to the Semiconductor Industry Association (SIA).

Blinken sought “to share his perspective on the industry and on supply chain issues, particularly after his recent visit to China” and “to hear directly from these companies about how they view supply chain issues, about how they view doing business in China,” It said Matthew Miller, spokesman for the Ministry of Foreign Affairs, at a press conference.

Discussions with government officials also included speeding up the disbursement of government money set aside for semiconductor companies in the CHIPS Act and making sure U.S. policy does not shut chip companies out of the lucrative Chinese market, another source familiar with the matter said.

Commerce’s Raimondo oversees the $39 billion CHIPS Act support program for semiconductor manufacturing approved by Congress last year. The law also created a 25% investment tax credit for building tile 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 rules on how much computing speed such chips can have, but has yet to choose a specific threshold.

Earlier on Monday, US-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 curb China’s chip industry and a new executive order limiting some outbound investment.

“Our actions are carefully tailored to focus on technologies with national security implications, and designed to ensure that US and allied technologies are not used to undermine our national security,” a White House National Security Council spokesperson said.

Not all officials were expected to meet with all companies, said the first source, who spoke on condition of anonymity.

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

The meetings come after China recently moved to limit exports of raw materials such as gallium and germanium used to make chips, which the department’s spokesman said Blinken discussed in CEO talks.

Nvidia, Qualcomm and Intel have decisive sales in China. Qualcomm is the only company licensed by U.S. regulators to sell mobile phone chips to Huawei Technology Co Ltd ( HWT.UL ).

Nvidia sells an AI chip tailored for the Chinese market that is already gaining traction among major Chinese firms, and Intel CEO Pat Gelsinger traveled to China last week 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 Francisco Editing by Chris Sanders, Susan Heavey, Matthew Lewis and Nick Zieminski

Our standards: Thomson Reuters Trust Principles.

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