Intel CEO says sanctions on China squanders opportunity for US chipmakers like Intel

When the Middle Kingdom starts making its own processors, it won’t buy ones made by me!

Computex Further US export restrictions on China may force the country to develop its own advanced semiconductors and significantly compete against US chipmakers, Intel CEO Pat Gelsinger cautions.

During a press conference at Computex in Taipei this week, the Xeon chief said China's inability right now to make its own cutting-edge chips means it has to rely on those from America and other Western countries, export limits allowing, describing that situation a "good market opportunity" for the likes of Intel.


Gelsinger shoots from the lip at Qualcomm and Nvidia


The technological gap between Intel and Chinese foundries is quite large. Intel is fabbing next year's Panther Lake CPUs on its 18A (or 1.8nm) process, while Chinese foundries such as SMIC have only just got 7nm processors out on the market. However, SMIC and other foundries apparently can't produce 7nm chips in high volume – the yield is thought to be in the toilet – according to Commerce Secretary Gina Raimondo, meaning China is largely limited to chips built on 14nm or older nodes.

TSMC and Samsung are in a similar superior position, being at the forefront of advanced chip production.

While sanctions and export restrictions on China and Chinese companies are designed to keep the Middle Kingdom at a technological disadvantage, Gelsinger says turning up the heat too much could have the opposite effect. "If that line is too restrictive, then China has to build its own chips," the CEO said. Or rather, not buy Intel's.

The initial round of sanctions in 2022 was already fairly harsh, as it prevented the export of Nvidia's A100 and H100 to China, among other chips with performance deemed to be too high. Those export restrictions were upgraded in October to include GPUs that Nvidia made to comply with the initial restrictions, namely the A800 and the H800.

The October sanctions led Nvidia to nerf its chips yet again for China. Similarly, Intel has a version of its Gaudi 3 AI processors specifically intended for use in China, and it presumably performs worse than the non-China models.

Instead of just accepting that it won't be able to get higher-end chips anymore, Gelsinger says China will just try and make them itself, decreasing its reliance on US tech, and making itself even more immune to further sanctions. This is arguably already happening to some degree, as Chinese tech giant Huawei is already pursuing its own chipmaking tools and has launched its latest Ascend 910B GPU, which is allegedly equal to Nvidia's A100.

America has been leaning on suppliers and friendly nations to not sell to China cutting-edge semiconductor manufacturing tools, forcing the Middle Kingdom to either acquire that tech through other means, develop it by itself, or rig up older equipment so that it can scale down to smaller process nodes.

It's probably also about money for Intel

Of course, Gelsinger would probably also appreciate less strict sanctions since it would allow Intel to sell faster processors in China, which would increase its lead over China-based competitors. This has apparently been an issue for Nvidia, which had to cut the price of its H20 GPU, the fastest it can sell to China, to be cheaper than Huawei's Ascend 910B.

Intel has not only been inhibited by sanctions in respect to Gaudi 3, but also concerning its consumer-grade Meteor Lake chips. Chipzilla was initially able to supply Huawei with Meteor Lake CPUs for the Chinese giant's latest MateBook X Pro laptops thanks to a special export license it obtained in 2020. However, outrage from American politicians over the Intel-powered laptop pushed the Commerce Department to revoke Intel's export license.

The loss of the license caused Intel to revise its expected revenue range for 2024, from $12.5 billion to $13.5 billion, to now $12.5 billion to $13 billion. That implies that the financial fallout of not being able to sell Meteor Lake chips to Huawei as expected was as much as $500 million.

While Gelsinger may be correct that extreme sanctions could inadvertently push China to more meaningful semiconductor self-sufficiency, there's undoubtedly much Intel would gain by more forgiving export rules. ®

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