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Asia Times
4 days ago
- Business
- Asia Times
Trump's tech sanctions to empower China, betray America
President Donald Trump is stepping up US efforts to cut off China's access to advanced technology, marking a continuation of restrictions first launched in his first term and continued under the Biden administration. The primary victims of these technology bans are American companies that were once China's preferred suppliers. The main beneficiaries are Chinese companies, some of which have been handed massive market opportunities stripped of their most formidable foreign competitors. This has most recently been illustrated by new restrictions on exports to China of US semiconductor design technology, Nvidia's H20 AI processor and jet engines for passenger aircraft. Last week, the Bureau of Industry and Security of the US Department of Commerce ordered electronic design automation (EDA) software providers serving the semiconductor industry to halt shipments to Chinese customers. On the news, the share prices of the world's top two EDA companies, Synopsys and Cadence Design, dropped by more than 13% and then recovered to finish down 6% and 8%, respectively, in the week to Friday, May 30. The third major EDA supplier, the US company formerly known as Mentor Graphics now owned by Germany's Siemens, is no longer publicly traded. According to market research organization TrendForce, Synopsys, Cadence Design, and Siemens have 31%, 30%, and 11% of the global EDA market, respectively. China accounted for 16% and 12% of Synopsys' and Cadence's EDA sales in 2024. Siemens does not provide a geographical breakdown of its EDA sales. As EETimes reports, EDA is seen as 'the true choke point' in China's semiconductor industry, particularly with regard to artificial intelligence (AI) processors and other advanced integrated circuits (ICs). In addition, according to Cadence, the BIS wrote that the sale of EDA software to Chinese companies constitutes 'an unacceptable risk of use in or diversion to a 'military end use' in China or for a Chinese 'military end user.'' In theory, exports of EDA tools to Chinese customers would be allowed under BIS license; in practice, licenses are extremely unlikely to be forthcoming. For this reason, Synopsys has reportedly shut down its EDA sales and service operations and told its local staff to stop taking new orders in China. EDA export restrictions were first considered during the previous Trump administration, but until now have reportedly been rejected because they were considered too aggressive. Now they are part of Trump's strategy to ramp up pressure on China in pursuit of a broad trade deal. Last year, Synopsis, Cadence Design and Siemens held approximately 80% of the Chinese EDA market, but that figure is already in decline. Synopsys' sales in China dropped 28% year-on-year in the first half of its fiscal 2025 (the six months to April), with the share of its total sales made there falling from a peak of 17% in Q3 of fiscal 2024 to 10% in Q2 of 2025. Cadence Design reported a 9% year-on-year increase in China sales in Q1 of its fiscal 2025 (ended March) but a 24% decline from Q4 of 2024, with the share of its total sales made in China dropping from 13% to 11%. And now, if Trump doesn't back down, it – and Synopsys's 10% – could fall to zero. Meanwhile, the sales of Chinese EDA companies are growing. There are more than ten EDA software and system developers in China, including Empyrean Technology, Primarius Technologies and Xpeedic. A combination of estimates from market research and industry associations, independent analysts and the companies themselves puts their market shares at 10%-12%, 5%-6% and 3%-4%, respectively. In March 2025, Empyrean announced plans to take control of Xpeedic. In Q1 of 2025, Empyrean and Primarius' sales were up 10% and 12% year-on-year, respectively. While the share prices of US EDA companies fell, those of their Chinese competitors rose. The share prices of Empyrean Technology and Primarius Technologies jumped 16% and 21%, respectively, last Wednesday and Thursday. Primarius, which has a significantly smaller market capitalization, continued to rise, finishing up 35% in the week through Tuesday, June 3. Chinese EDA companies receive support from central and local governments, academia and private sector customers, including tech giants Huawei and SMIC. China's National Center of Technology Innovation for EDA was established in Nanjing in June 2023, with contributions from Jiangsu Province, the Ministry of Education, Peking and Xidian universities, and an investment company from Shenzhen. Member companies include Empyrean, Primarius and Shenzhen Giga Design Automation. It could take some time, but China appears to be relatively well-positioned to take advantage of and overcome the latest US government sanctions. The Chinese EDA industry is already undergoing consolidation, and the forced withdrawal of US competitors provides a new incentive to push their technological limits and build economies of scale. Notably, Empyrean already works with Japan's Renesas while Empyrean, Primarius and Xpeedic are EDA partners of Samsung Foundry. In April, Nvidia revealed in an SEC filing that sales of its H20 AI processors to China would effectively be banned, and that it was therefore planning to write down $5.5 billion worth of inventory, purchase commitments and related reserves in Q1 of its fiscal 2026. (Shipments of equivalent processors from AMD were also restricted.) In the event, Nvidia's write-down was $4.5 billion but the ban also reduced sales by $2.5 billion and $8 billion more is expected to be lost in Q2. China accounted for about 10% of Nvidia's sales in Q1, down from 13% the previous fiscal year. Now, the figure seems likely to drop to low single digits. Nvidia's share of the Chinese market for AI processors, which has already dropped from 95% to 50% (40% by some estimates), is also expected to keep falling, likely to insignificance if US policy doesn't change. At the Computex 2025 event held in Taipei, Taiwan, from May 20 to 23, Nvidia CEO Jensen Huang called export controls a 'failure.' Elaborating on the assessment, he said that, 'The US has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable, and now it's clearly wrong.' A Nvidia spokesperson added, 'With the ban on H20, our competitors in China are now largely shielded from US competition and free to leverage that entire $50 billion market to build a robust AI ecosystem.' In an interview with the Stratechery tech newsletter published on May 19, Huang said, 'China's doing fantastic. 50% of the world's AI researchers are Chinese and you're not going to hold them back, you're not going to stop them from advancing AI. Let's face it, DeepSeek is deeply excellent work. To give them anything short of that is a lack of confidence, so deep that I just can't even tolerate it.' Alibaba, Baidu, Tencent and other Chinese buyers of AI processors are already using domestic alternatives to chips from Nvidia and AMD, starting with, but not limited to, Huawei's Ascend series. On May 28, The New York Times reported that the US government has restricted sales of jet engine technology to China, which will likely be a major headache for the Commercial Aircraft Corporation of China (COMAC). COMAC's C919 passenger jets are currently equipped with LEAP turbofan engines manufactured by CFM International, a joint venture between GE Aviation of the US and Safran Aircraft Engines of France. However, the Aero Engine Corporation of China appears to be making progress toward developing a domestic alternative, known as the CJ-1000. In March, as reported by the South China Morning Post, Shi Jianzhong, honorary president of the Shanghai Society of Aeronautics and former deputy general manager of COMAC, told a Chinese aviation forum that 'The CJ-1000 engine is in trial runs and it fared better than my most optimistic expectations.' Verification flights of the C919 aircraft equipped with the CJ-1000 jet engine are expected to begin 'soon.' There is also the possibility of renewed collaboration with Russia, which has a history of building jet engines for commercial aircraft dating back to the Soviet Union era. But that appears to be on hold as Russia concentrates on developing key components for its own short- and medium-range passenger jets. Two years ago, Yury Slyusar, CEO of Russia's United Aircraft Corporation (UAC), warned COMAC that 'There may come a point when Western nations halt the supply of crucial components, assemblies, and products, potentially leading to a halt in aircraft production. Therefore, we urge them to reconsider the 'insides' of the aircraft as part of joint projects and reduce dependency on Western companies.' Ever since Trump first slapped sanctions on Huawei in 2018, the US government has incentivized Chinese innovation while undermining once-dominant American market shares, creating what it aims to prevent – the emergence of Chinese technology industries that are both self-sufficient and globally competitive. The attempt to suppress Huawei – which today is not only a world leader in telecom equipment but also has a growing presence in AI, IC design, autonomous driving and even enterprise software – has, by any measure, failed. And that will likely be the case for many Chinese companies targeted by the latest round of US sanctions. At the Reagan National Economic Forum held in California at the end of May, JP Morgan Chase CEO Jamie Dimon said, 'I would engage with China. I just got back from China last week. They're not scared, folks. This notion they're going to come bow to America, I wouldn't count on that. When they have a problem, they put 100,000 engineers on it. They've been preparing for this for years.' Follow this writer on X: @ScottFo83517667
The Guardian
28-05-2025
- Business
- The Guardian
Wall Street expects growth from Nvidia even as Trump nixes $15bn in revenue
Nvidia is set to report its first quarter earnings after the bell on Wednesday. The company is a bellwether for the business of artificial intelligence, both in its cutting-edge hardware and the new regulatory headwinds it is facing, and investors will be watching closely. Wall Street expects the company to report $43.3bn in revenue, up 66% year over year, and adjusted earnings per share of 73 cents. There's no company more important to 'the markets and global investor sentiment' than the high-flying chipmaker, according to Wedbush Securities analysts. Nvidia's quarterly reports for the past year have shown explosive growth and is expected to beat Wall Street expectations Wednesday. The company may provide guidance that underwhelm investors for the first time in two years, though. Donald Trump's April announcement that the administration was tightening export rules on computer chips effectively banned Nvidia from selling its H20 AI chips to China, a major source of revenue. The company revealed in a recent SEC filing that the change would cost the company $5.5bn in charges. In an interview with Ben Thompson, the Nvidia CEO Jensen Huang said the move was 'deeply painful' and could result in $15 bn in revenue loss. 'No company in history has ever written off that much inventory,' Huang said. '[N]ot only am I losing $5.5bn – we wrote off $5.5bn – we walked away from $15bn of sales and probably ... $3bn worth of taxes.' The tightening rules on chip exports comes as the committee on China within the US Congress announced it was seeking answers from Nvidia about how its chips ended up powering breakthrough AI models in China, particularly DeepSeek, an AI company that matched the products of US AI companies without the same computing power. The committee alleges in a new report that China-based DeepSeek 'covertly funnels American user data to the Chinese Communist party, manipulates information to align with CCP propaganda, and was trained using material unlawfully obtained from U.S'. Analysts are bracing for what this could mean for the next few quarters. 'Next year will be interesting since there is uncertainty from the geopolitics (ie export controls, tariffs, negotiations), despite strong demand for its data center products (Hopper and Blackwell chips),' said Alvin Nguyen, a senior analyst at Forrester. While in previous quarters, analysts were looking to see how much the company would surpass investor expectations this quarter the considerations are more tame, according to a Wedbush Securities analyst's note. Sign up to TechScape A weekly dive in to how technology is shaping our lives after newsletter promotion 'This quarter its more about strong numbers and the ability to maintain guidance despite the China blockade,' the note reads. 'Investors are more laser focused on the medium term and long-term outlook from Jensen as the China situation could quickly change depending on the ongoing US/China trade negotiations.' While the company's business in China remains up in the air, analysts seem heartened by recent demand for Nvidia chips in Saudi Arabia and the UAE. Nvidia was among the beneficiaries of the AI windfall that arose from Trump's visit to the region, which resulted in Saudi Arabia committing to $600bn to US companies. Nvidia said it will sell hundreds of thousands of AI chips to Saudi Arabia, including 18,000 of its latest chip, Blackwell, to a Saudi Arabian sovereign wealth-fund backed startup called Humain.
South China Morning Post
29-04-2025
- Business
- South China Morning Post
Nvidia denies China joint venture report after CEO's whirlwind visit to Beijing, Shanghai
Artificial intelligence (AI) chip supplier Nvidia has denied a report that it is planning to set up a Chinese joint venture to maintain its business presence on the mainland, as it copes with US export restrictions on its graphics processing units (GPUs). Advertisement Taiwanese tech media Digitimes reported on Monday that Nvidia's CEO Jensen Huang was considering establishing a joint venture in mainland China to maintain the operations of the company's CUDA computing platform, as well as other business interests in the country, which contributed US$17.1 billon in company revenues in the previous financial year. An Nvidia representative denied the report on Tuesday. 'There is no basis whatsoever for any of these claims,' the person told the Post, adding that it was 'irresponsible to publish baseless claims and speculation as fact'. The denial of joint venture plans by Nvidia comes as the US chip giant is trying to navigate its way through an intensifying US-China tech war. On the one hand, Nvidia is trying to maintain Chinese sales and fend off competition from the mainland, while on the other hand it has to comply with US regulations that restrict exports of advanced chips to China. Shanghai Mayor Gong Zheng (left) met with Nvidia CEO Jensen Huang on April 18, 2025. Photo: Handout Huang made a surprise visit to China earlier this month after its H20 AI chips, which were tailor-made for Chinese clients to comply with previous export rules, were banned from sale to China under tighter rules applied by Washington. Before the trip, the company disclosed that the H20 China ban would cost it US$5.5 billion
Emirates 24/7
17-04-2025
- Business
- Emirates 24/7
Gold Hits New Record Above $3,350 as Safe-Haven Demand Surges Amid Escalating Trade Tensions
Gold extended its historic rally on Thursday, surging to yet another record high as investors flocked to the precious metal amid mounting global trade tensions and growing uncertainty around U.S. economic policy. Spot gold rose 0.1% to $3,346.20 per ounce as of 0008 GMT, after earlier hitting a new all-time high of $3,357.40. U.S. gold futures also gained momentum, climbing 0.4% to $3,359.50. The surge follows Wednesday's breakthrough above the $3,300 level, underscoring strong safe-haven demand as geopolitical and economic risks intensify. The latest trigger came after U.S. President Donald Trump ordered a probe into potential new tariffs on all critical minerals imports, expanding the administration's trade crackdown beyond pharmaceuticals and semiconductor chips. In retaliation, China instructed its airlines to halt further deliveries of Boeing aircraft, while the U.S. government further restricted Nvidia's H20 AI chip exports to China. These developments deepened fears of a prolonged trade standoff between the world's two largest economies, driving investors toward gold — traditionally seen as a hedge against inflation, geopolitical risk, and economic instability. So far in 2025, gold has climbed more than 27%, buoyed by trade war anxieties, a weakening U.S. dollar, and expectations of interest rate cuts. U.S. Federal Reserve Chair Jerome Powell on Wednesday signaled a cautious approach to monetary policy, stating that the Fed would need more data before making any moves on rates. However, Powell also warned that the Trump administration's tariff policies could derail the central bank's goals for inflation and employment. Markets are now pricing in around 91 basis points worth of rate cuts by the end of 2025, further supporting the gold rally. Meanwhile, the U.S. dollar edged lower, hovering near a three-year low reached last week, enhancing gold's appeal to holders of other currencies. In other precious metals: Spot silver rose 0.1% to $32.78 an ounce Platinum gained 0.2% to $969.05 Palladium slipped 0.7% to $964.75 Key Economic Data Ahead (GMT): 12:30 – U.S. Housing Starts (March) 12:30 – U.S. Initial Jobless Claims (Week ending April 12) 12:30 – U.S. Philadelphia Fed Business Index (April) 13:15 – European Central Bank policy decision As investors await fresh macroeconomic signals, gold remains firmly in the spotlight as the preferred shield against an increasingly volatile global outlook. Follow Emirates 24|7 on Google News.
