Over the past year, the United States has implemented controls and license requirements related to the sale of advanced chips and chip components to China. China reciprocated in kind, limiting who can buy the necessary components for chip manufacturing. The escalating restrictions have been justified by the Biden administration on national security grounds, but they may be costing U.S. companies.
Nvidia was not the only affected company. The U.S.-based manufacturer Micron estimated that China's May ban on the company over national security concerns would cost it a"high single-digit" percentage of its annual revenue. Chinese companies have felt the brunt of the trade war as they attempt to rebuild their own ability to manufacture chips internally. The government quickly stepped in to provide financial support to Chinese chip manufacturers as they try to replace their plants. The companies have also had to find alternative tools to build more advanced chips due to the U.S. not allowing Chinese companies to buy the appropriate tools, slowing down production in the process.
The"unverified" list expanded over the year, with the Commerce Department adding dozens of additional companies to the list of Chinese firms now affected. This included placing companies like Yangtze on the list. The Commerce Department is expected to implement additional restrictions in August, including an executive order from Biden himself.