The Biden administration is reportedly planning new export controls that would allow unrestricted exports of semiconductors necessary for artificial intelligence (AI) development to allied countries while limiting the quantity available for purchase by other nations, drawing attention to the potential impact on domestic AI chip-related corporations, including Samsung Electronics and SK Hynix, as well as the IT industry.
In the case of South Korea, it is expected to have little impact due to its status as an ally, but in the cases of China and Russia, it is predicted that various application technologies and services based on AI development will be hindered. However, domestic semiconductor corporations selling neural processing units (NPUs) and various AI semiconductor-related design assets (IPs) to China are in the process of determining whether the regulations will also apply to South Korea.
On the 9th, the industry is assessing the impact of the Biden administration's new export controls on the domestic semiconductor industry. The previous day, Bloomberg reported that the Biden administration intends to restrict sales of AI semiconductors used in data centers by country and by corporation to ensure that AI development is concentrated among allies while global companies adhere to U.S. standards.
According to reports, the Biden administration plans to classify countries into three tiers for export limitations. The top tier, comprising a small number of U.S. allies, will essentially be allowed to purchase U.S.-made semiconductors without restrictions, as before. Asian allies such as South Korea, Japan, and Taiwan, as well as major Western countries like the United Kingdom, France, Germany, and Canada, will also be able to freely purchase AI semiconductors from companies such as Nvidia and AMD as usual.
However, hostile countries will be effectively barred from importing U.S.-made AI semiconductors. This includes China, Russia, North Korea, Iran, Venezuela, Cuba, Belarus, Iraq, and Syria. Most other countries will have a cap on the total computing power they can import. Countries in this last tier may import significantly more semiconductors than the national cap if they agree to adhere to the security requirements and human rights standards set by the U.S. government.
Kang Seong-cheol, a researcher at the Korean Semiconductor Display Technology Association, noted, "The division of export regulation standards into allies and hostile nations reflects U.S. concerns that AI semiconductors may become military strategic materials," adding, "Given that Chinese AI software technology has already significantly caught up with the U.S., this seems to be a measure to maximize the gap in AI semiconductor hardware like graphic processing units (GPUs) and NPUs."
Samsung Electronics and SK Hynix have no official stance on the matter, but the Semiconductor Industry Association (SIA), of which both companies are members, has expressed opposition. It stated that the Biden administration's regulations could severely undermine U.S. leadership and competitiveness in the semiconductor technology and advanced AI systems sectors without consulting industry opinions, voicing concern over the unprecedented scope and complexity of the regulations.
Nvidia is also strongly opposing the measures. The company stated, "Regulations limiting exports to most regions of the world will not only fail to reduce the risk of (AI semiconductor) misuse but will also represent a significant policy shift threatening economic growth and U.S. leadership." Nvidia is exploring various ways to expand exports of high-performance GPUs to China but is currently only able to supply some low-performance GPUs due to strong U.S. sanctions.
The industry is concerned about the negative impact on Samsung Electronics and SK Hynix, which rely significantly on the increased volumes of high-bandwidth memory (HBM) for Nvidia. As Nvidia's GPU deliveries increase, the performance of SK Hynix, the main supplier of HBM, is also expected to improve. An insider familiar with SK Hynix stated, "It's difficult to assess how this will immediately affect the company's profits," but added, "Since exports of GPUs to China have already faced restrictions, I don’t foresee a huge impact right now."
In contrast, domestic corporations related to AI NPUs and associated technologies are worried that the new U.S. regulations may also impact export regulations on domestic strategic materials. Corporations like Rebellion and Furiosa AI, which are developing NPUs for data center learning to replace Nvidia's GPUs, have targeted markets beyond South Korea, including China, while companies like DeepX and Mobilint are also expected to see significant growth in sales in the Chinese NPU market affecting their growth trajectory.
A representative from a domestic AI semiconductor corporation stated, "The biggest concern for the U.S. is that AI semiconductors might be used as military materials, and we are discussing with the Ministry of Industry whether the NPUs to be exported by domestic corporations will be classified as strategic materials," adding, "Until now, we could supply the cutting-edge NPU products to China without significant issues, but we need to confirm whether there will be changes in these policies based on future government interpretations and positions."