Due to US and UK export restrictions, Chinese e-commerce giant Alibaba cannot acquire Arm’s most cutting-edge chip designs. According to The Financial Times, Arm has concluded that it cannot sell Alibaba. It’s most recent Neoverse V series chip designs since neither the US nor the UK will allow the sale. It will also not provide export permits for the chip designs to China.
Wide-ranging limits on chip shipments to China were put in place by the US in October. They intended to limit Beijing’s access to technology and the military. Manufacturers like Intel and Micron must first get a license from the US Commerce Department to export semiconductors and machinery for creating chips to Chinese enterprises. The UK has also enacted similar export restrictions.
Arm, a British company controlled by Japanese investor SoftBank, cannot market its cutting-edge chips. The reason is the Wassenaar Arrangement, a 42-country export control agreement initially created in 1996. As a result, the arm claims to the Financial Times that it cannot sell the chip designs to China. This happened since they are deemed “US origin” technology and, as such, fall under Wassenaar.
Neoverse V1 and V2 chips are capable of cloud computing and machine learning. It has been hampered by the inability of Chinese corporations to obtain Arm’s designs. The Arm Neoverse V1 chip designs are already included in Amazon Web Services (AWS) EC2 instances. It enables performance gains for US businesses.
US consumers used most of the phones manufactured in China
These export restrictions, which come years after Arm was initially forced to break off relations with Huawei due to a US trade embargo, would substantially impair China’s capacity to produce cutting-edge processors. Despite China making many phones that US consumers use daily, Huawei phones are still unavailable in the US.
The US, UK, Japan, and the Netherlands have agreed to tighten restrictions on importing chip manufacturing equipment to China. The limitations on the export of machinery for making chips to China come after many months of US investment in local chip production. A $280 billion CHIPS and Science Act containing incentives intended to increase US semiconductor production was approved by President Joe Biden in the month of August.
The first domestic chip-making facilities to result from the CHIPS and Science Act, Intel broke ground on its massive $20 billion semiconductor facility in September. It is a part of Intel’s more significant intention to invest $100 billion in Ohio over the following ten years.
In addition, President Biden most recently joined Tim Cook to welcome the arrival of manufacturing equipment at TSMC’s first fab in Arizona, which will start producing advanced chips for Apple and other companies in 2024 before expanding to a second location in 2026.