A third under-the-radar development, however, could be seen as the most important piece of this turbulent ‘summer of the semi-finals’.

As Bloomberg and other news outlets reported this week, the landmark CHIPS-Plus legislation set for President Joe Biden’s signature includes a provision designed to cripple Chinese chipmaking for decades to come. The move could put America back on the path to semiconductor supremacy or further inflame long-simmering tensions between two geopolitical and military giants.

The little-discussed language in the CHIPS-Plus bill specifies that semiconductor producers accepting US subsidies cannot materially expand manufacturing of advanced chips in China for 10 years. The United States defines “advanced” chips as those with circuitry below 28 nanometers, which are already required for virtually all new smartphones, vehicles, factory equipment and other electronic devices. Smaller nanometers make more powerful chips.

Bloomberg reported that Taiwan Semiconductor Manufacturing Co., which produces about 90% of the world’s most advanced chips, is the only potential CHIPS-Plus grant recipient currently manufacturing sub-28 nanometer semiconductors in China, although Intel also lobbied against the restriction.

Essentially, the provision would shut down virtually all modern chip manufacturing in China by companies enjoying the benevolence of the US government, potentially preventing China from turning its vast manufacturing base into a future center for advanced chip manufacturing.

The bill’s anti-China stipulation is already causing some major chipmakers to reconsider their plans.

The FinancialTimes reported on Tuesday that Samsung, which aspires to overtake TSMC as the world’s largest producer of advanced chips, and one of its smaller South Korean counterparts, SK Hynix, are reassessing their Chinese manufacturing footprint. The FT cited sources familiar with the views of the two companies, including a senior Korean official who said several investments in China would likely be “dropped”.

Korean chipmakers “have rethought their strategies due to the technology war between the US and China, and they are now looking more to the US due to geopolitical risks,” said Kim Young-woo, head of research at SK Securities in Seoul and adviser to the Korean. government on semiconductor policy, told the FT.

As it stands, the world’s three major chipmakers – Samsung, TSMC and Intel – are all in the early stages of building semiconductor fabs in the United States, with each complex expected to cost at least 12 to 20 billion dollars. The bill’s anti-China restrictions, along with significant financial incentives from the US government, could help bring chip manufacturing back to US soil.

Will China respond to what will likely be viewed domestically as US “bullying” of its technological development capabilities?

After the tariffs and restrictions on tech trade that began under the Trump administration, it’s not hard to imagine the bill’s anti-China stipulation morphing into a broader dispute. And given how deeply connected US companies are to China for general manufacturing needs, chipmakers and other tech companies could find themselves caught in the middle of an unwelcome geopolitical standoff.

For now, some experts believe U.S. and Asian chipmakers are at relatively minimal risk of retaliation from China. Indeed, China still relies heavily on foreign semiconductor producers for the advanced chips it needs to assemble cars, smartphones and other products in its factories. China does not have the capacity to produce advanced chips on its own. As a result, Chinese leaders have little to gain from imposing sanctions on chipmakers like TSMC, Samsung, etc.

But if Chinese semiconductor companies, which are heavily subsidized by the government, catch up in technology at some point in the future, the situation will be different.

“Maybe after five, 10 years later…if things have reversed in the sense that Chinese companies are supplying most of the semiconductors to China, and they don’t need to press TSMC and Samsung, then they will be in a position to sanction companies that take money from the US government,” said Louis Lau, chief investment officer at advisory firm Brandes Investment Partners. Nikkei Asia.

China has, to date, shown little evidence that it will keep pace with its Taiwanese, South Korean and American semiconductor rivals. But maybe he just didn’t have enough motivation to do it.

You want to send thoughts or suggestions for Technical sheet? Write to me here.

Jacob Charpentier

NEW

Wandering in the forest. Digital trading platform Robin Hood announced plans on Tuesday for dismiss nearly a quarter of its workforce following a dramatic drop in revenues at the start of the year. Robinhood CEO Vlad Tenev said the pandemic darling had overhired in anticipation of continued growth beyond 2020 and 2021, a time when retail marketers have flocked to the company’s platform. The layoff disclosure coincided with Robinhood’s release of second-quarter results, which showed a 44% drop in year-over-year revenue as retail investors shift their focus to retail trading. actions. Robinhood shares were up 12% in midday trading on Wednesday.

Miss that spark. Matching group shares fell 17% in midday trading on Wednesday after meetings were held second quarter revenue estimates missed and issued a disappointing guidance for the current quarter, CNBC reported. Company executives forecast no revenue growth for the current quarter amid slowing online dating business, weakness in several markets and challenging currency exchange rates. Match CEO Bernard Kim also announced that the company’s Tinder brand executive, Renate Nyborgleaves his post.

Woe to the upper class car buyer. Upstart electric car maker Rivian tuesday criticized a Senate proposal which would limit new electric vehicle tax credits to certain customers, arguing that the restrictions would hurt the company’s growth at a critical time in its development, the the wall street journal reported. The legislation, included in a sweeping spending and tax bill fast moving through the Senate, would provide a $7,500 tax credit to car buyers who purchase a vehicle that costs less than $80,000 and have a family income of $150,000 as an individual or $300,000 as a married couple. While Rivian’s trucks and SUVs start at under $80,000, most sell above that price.

Gain ground. Advanced micro-systems achieved record sales in the second quarter, but the chipmaker’s share price fell 1% following a second-half forecast that was slightly below Wall Street expectations, MarketWatch reported. AMD’s revenue hit $6.55 billion, a 70% jump from a year earlier, as its data center business boomed and game sales surged. However, the semiconductor company told analysts that a drop in PC sales will likely weigh on its results for the rest of the year.

FOOD FOR THOUGHT

At the service of investors. AppleThe booming services business encompasses a sprawling list of offerings, ranging from streaming music to video games to the App Store. But investors have virtually no idea of ​​each unit’s financial health when Apple releases its quarterly results. Bloomberg’s Martin Peers argued for greater transparency at the notoriously secretive Apple on Tuesday, saying Wall Street deserved more information about much of the company’s earnings. Apple reported $68.4 billion in services revenue in 2021, up from $46.3 billion in 2019.

From article:

Consider this conundrum over the last quarter: Despite listing advertising as a key driver of growth, Cook told analysts that digital advertising “was clearly impacted by the macro environment.” You must be wondering what the App Store’s contribution looks like if digital advertising is held back by the economy but remains the primary source of growth.

The need to know more will only grow in the current quarter. Apple executives told analysts that services revenue growth will slow further in the third quarter due to “macroeconomic and currency factors.” What we really need to know is what’s going on with the App Store.

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BEFORE YOU LEAVE

A scathing decision. Streaming giants value content above all else, so Tuesday New York Post report it Discovery of Warner Bros. will completely set aside bat girl without even launching the $75 million+ project on HBO Max sent Hollywood into a frenzy. Was the next movie, like the Job reported, so “unsalvageable” that the management of the newly merged company wanted to save it from catwoman– as ignominy? Was it an unfortunate victim of Warner Bros. Discovery towards the economy? Did company officials see the film as a potential post-merger tax deductionas Variety and Deadline reported? Waiting for answers, the crew behind bat girl can at least sympathize with the folks from the other WBD CNN Plus releases.