According to reports from Investing.com and Hong Kong's South China Morning Post, the Biden administration plans to introduce a new policy called the "Global AI Proliferation Rule," which aims to close existing regulatory loopholes, strictly control global shipments of key graphics processors (Gpus) used to train AI models, and ensure effective enforcement of relevant regulations.

The two core elements of the new rules include:

1. Prohibit certain countries that assist China in developing AI from acquiring AI chips to limit China's technological progress in the field of AI.

2. Prevent foundry manufacturers such as TSMC and Samsung Electronics from producing AI chips for Chinese companies, further cutting off China's access to advanced chips.

Jefferies analysts noted that the restrictions on TSMC and Samsung Electronics "have a very high probability of implementation." In fact, TSMC has suspended production of 7nm chips for Chinese customers pending further policy details from the US government.

Chinese companies could be hit hard

The new rules are expected to define AI chips in detail based on process nodes, chip size, and whether advanced technologies such as CoWoS (wafer-level packaging) and HBM (high bandwidth memory) are used. The move could have a major impact on Chinese companies that design Gpus, application-specific integrated circuits (ASics), and advanced driver assistance systems (ADAS) chips, including well-known vendors such as Alibaba, Baidu, and Horizon Robotics.

Horizon Robotics, for example, is a leader in the field of autonomous driving in China, and its chip products are widely used in the field of smart cars. If the new regulations are implemented, Horizon Robot may face a shortage of chip supply, which will affect its technology research and development and market competitiveness.

Despite the Biden administration's clear goals, the Jefferies report also noted that the new rules could face many challenges at the enforcement level. These regions are not only important links in the global semiconductor industry chain, but also close Allies of the United States. Restrictions could damage U.S. relations with those countries and even trigger an international backlash.

Second, the new rules could be seen as coercive, further inflaming international tensions. TSMC and Samsung Electronics, for example, dominate the global semiconductor market, and any restrictions against them could have a knock-on effect on the global supply chain.

While the Biden administration is committed to increasing regulation of AI chip production, Jefferies believes those policies are unlikely to be reversed even under a Trump administration. This is because limiting China's technological progress in the field of AI has become a bipartisan consensus in the United States. Both the Biden administration and the future Trump administration are likely to continue to pursue similar policies to maintain America's leading position in the field of science and technology.

Global semiconductor landscape or change

If the new regulations are formally implemented, the global semiconductor industry chain will face major adjustments. TSMC and Samsung Electronics may be forced to reassess their customer mix and reduce their reliance on Chinese companies. At the same time, China is likely to accelerate the process of developing and producing chips on its own to reduce its dependence on foreign technology.

In recent years, China has invested heavily in the semiconductor field, trying to build an independent and controllable chip industry chain. For example, local companies such as Semiconductor Manufacturing International Corporation (SMIC) are working hard to upgrade their process technology, and although there is still a certain gap with TSMC and Samsung Electronics, with policy support, technological breakthroughs are expected in the future.

In any case, the competitive landscape of the global semiconductor industry is undergoing profound changes, and AI chips will undoubtedly become the core battlefield of this game.

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