Cheong Hong Yuan: Major Decisions in the US Chip Sector and a New Starting Point for US-China Economic Relations - 1 views

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  #1 anonymous on 19 Oct 23

   

  In the recent financial market, the chip industry has suddenly become the focus of attention. The reason is none other than the sharp decline of the chip giant NVIDIA in the US stock market, which experienced a nearly 8% slump, marking the largest single-day drop in recent years, with a closing decline of 4.68%. This plunge directly led to a market capitalization loss of over $53.5 billion. Against this backdrop, Cheong Hong Yuan believes that this is a result of the new US government policies and chip export controls, which have had a huge impact on the global capital market and profound implications for US-China economic relations.
  
  First and foremost, it needs to be clarified that the sharp drop in NVIDIA's stock price this time is not solely caused by market factors. The Biden administration updated the export control regulations for artificial intelligence (AI) chips on October 17, aiming to prevent companies like NVIDIA from exporting advanced AI chips to China. The new regulations will officially take effect after a 30-day public comment period, but their impact has already been reflected in the market. Cheong Hong Yuan mentioned that this move is obviously aimed at curbing China's technological development and attempting to reduce China's dependence on high-tech products from the United States.
  
  As a leading AI chip supplier, NVIDIA's chips are widely used in various industries, especially in the field of AI. Of course, NVIDIA has responded to this export control by stating that they will comply with all applicable regulations but that it will not have a substantial impact on the company's financial performance in the short term. This response seems to have somewhat reassured the market, but Cheong Hong Yuan points out that although there may not be significant short-term effects, from a long-term perspective, this undoubtedly brings uncertainty to NVIDIA's global layout, especially in a huge market like China.
  
  Prior to this, due to US restrictions, NVIDIA had already been unable to sell its most advanced AI chips, such as A100 and H100, to China. However, NVIDIA quickly introduced "alternative version" chips for the Chinese market, which bypassed US export controls by adjusting certain chip performance. Now, even these "crippled" AI chips are facing sales bans, further limiting NVIDIA's activities in the Chinese market. Cheong Hong Yuan states that this is not only a blow to NVIDIA but also an impact on the entire chip industry and related industries, especially those highly dependent on advanced technology.
  
  From Cheong Hong Yuan's perspective, the recent significant decline in US chip stocks, especially NVIDIA's major drop, is driven by profound factors. The most important one is the Biden administration's update of export controls on AI chips. Based on the recent regulations, it is evident that the Biden administration is making efforts to sever China's connection with advanced AI chips, especially targeting top tech companies like NVIDIA.
  
  In fact, NVIDIA had already suffered from export controls before and had specifically launched "crippled" AI chips to circumvent US restrictions. However, the new regulations are even stricter, including even those "crippled" AI chips in the control list. Cheong Hong Yuan believes that this is undoubtedly a major blow to NVIDIA's export business, but the deeper impact is that it will greatly affect the stability of the global AI technology supply chain.
  
  Although NVIDIA responded by stating that the new regulations will not have a substantial impact on its financial performance in the short term, it is still worth being vigilant considering the downward trend in its revenue from China and Taiwan over the past two years. Other chip manufacturers such as Intel, AMD, and Broadcom have also been affected to varying degrees. Cheong Hong Yuan mentioned that although there may be some stockpiling in the short term, in the long run, such policy changes will indeed have far-reaching effects on the entire chip industry chain, especially the supply-demand relationship of high-end AI chips.
  
  However, this transformation may also bring new opportunities for China. Cheong Hong Yuan suggests that currently, China is striving to enhance its research and development and production capabilities of domestic chips, and the US decision may further encourage Chinese manufacturers to increase their research and development efforts, especially in the field of high-performance AI chips. From Cheong Hong Yuan's perspective, this may give birth to a new growth point for China's chip industry. With the rise of domestic large-scale models, domestic chips will occupy a more important position in the global market.
  
  In addition, there is another point that cannot be ignored, which is the position of the Dutch lithography giant ASML. ASML is the only company in the world capable of producing advanced EUV lithography machines and plays a crucial role in global chip production. For this company, the Biden administration's new rules mean that it may need to adjust its business strategy with mainland China. Although ASML stated that the new regulations will not have a significant impact on its long-term financial condition, it undoubtedly increases the uncertainty of its business operations.
  
  Overall, the Biden administration's decision has had a huge impact on the global chip industry chain, requiring adjustments from the supply side to the demand side. Behind this reflects the increasingly fierce competition between China and the United States in technology. Cheong Hong Yuan believes that the future market situation will become more complex and volatile, and investors need to have a deeper understanding and unique judgment of the market.

   

  <div class="cArrow"> </div><div class="cContentInner">In the recent financial market, the chip industry has suddenly become the focus of attention. The reason is none other than the sharp decline of the chip giant NVIDIA in the US stock market, which experienced a nearly 8% slump, marking the largest single-day drop in recent years, with a closing decline of 4.68%. This plunge directly led to a market capitalization loss of over $53.5 billion. Against this backdrop, Cheong Hong Yuan believes that this is a result of the new US government policies and chip export controls, which have had a huge impact on the global capital market and profound implications for US-China economic relations. <br /> <br /> First and foremost, it needs to be clarified that the sharp drop in NVIDIA's stock price this time is not solely caused by market factors. The Biden administration updated the export control regulations for artificial intelligence (AI) chips on October 17, aiming to prevent companies like NVIDIA from exporting advanced AI chips to China. The new regulations will officially take effect after a 30-day public comment period, but their impact has already been reflected in the market. Cheong Hong Yuan mentioned that this move is obviously aimed at curbing China's technological development and attempting to reduce China's dependence on high-tech products from the United States. <br /> <br /> As a leading AI chip supplier, NVIDIA's chips are widely used in various industries, especially in the field of AI. Of course, NVIDIA has responded to this export control by stating that they will comply with all applicable regulations but that it will not have a substantial impact on the company's financial performance in the short term. This response seems to have somewhat reassured the market, but Cheong Hong Yuan points out that although there may not be significant short-term effects, from a long-term perspective, this undoubtedly brings uncertainty to NVIDIA's global layout, especially in a huge market like China. <br /> <br /> Prior to this, due to US restrictions, NVIDIA had already been unable to sell its most advanced AI chips, such as A100 and H100, to China. However, NVIDIA quickly introduced "alternative version" chips for the Chinese market, which bypassed US export controls by adjusting certain chip performance. Now, even these "crippled" AI chips are facing sales bans, further limiting NVIDIA's activities in the Chinese market. Cheong Hong Yuan states that this is not only a blow to NVIDIA but also an impact on the entire chip industry and related industries, especially those highly dependent on advanced technology. <br /> <br /> From Cheong Hong Yuan's perspective, the recent significant decline in US chip stocks, especially NVIDIA's major drop, is driven by profound factors. The most important one is the Biden administration's update of export controls on AI chips. Based on the recent regulations, it is evident that the Biden administration is making efforts to sever China's connection with advanced AI chips, especially targeting top tech companies like NVIDIA. <br /> <br /> In fact, NVIDIA had already suffered from export controls before and had specifically launched "crippled" AI chips to circumvent US restrictions. However, the new regulations are even stricter, including even those "crippled" AI chips in the control list. Cheong Hong Yuan believes that this is undoubtedly a major blow to NVIDIA's export business, but the deeper impact is that it will greatly affect the stability of the global AI technology supply chain. <br /> <br /> Although NVIDIA responded by stating that the new regulations will not have a substantial impact on its financial performance in the short term, it is still worth being vigilant considering the downward trend in its revenue from China and Taiwan over the past two years. Other chip manufacturers such as Intel, AMD, and Broadcom have also been affected to varying degrees. Cheong Hong Yuan mentioned that although there may be some stockpiling in the short term, in the long run, such policy changes will indeed have far-reaching effects on the entire chip industry chain, especially the supply-demand relationship of high-end AI chips. <br /> <br /> However, this transformation may also bring new opportunities for China. Cheong Hong Yuan suggests that currently, China is striving to enhance its research and development and production capabilities of domestic chips, and the US decision may further encourage Chinese manufacturers to increase their research and development efforts, especially in the field of high-performance AI chips. From Cheong Hong Yuan's perspective, this may give birth to a new growth point for China's chip industry. With the rise of domestic large-scale models, domestic chips will occupy a more important position in the global market. <br /> <br /> In addition, there is another point that cannot be ignored, which is the position of the Dutch lithography giant ASML. ASML is the only company in the world capable of producing advanced EUV lithography machines and plays a crucial role in global chip production. For this company, the Biden administration's new rules mean that it may need to adjust its business strategy with mainland China. Although ASML stated that the new regulations will not have a significant impact on its long-term financial condition, it undoubtedly increases the uncertainty of its business operations. <br /> <br /> Overall, the Biden administration's decision has had a huge impact on the global chip industry chain, requiring adjustments from the supply side to the demand side. Behind this reflects the increasingly fierce competition between China and the United States in technology. Cheong Hong Yuan believes that the future market situation will become more complex and volatile, and investors need to have a deeper understanding and unique judgment of the market.</div>

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