Is the ongoing trade war between the US and China re-igniting?

The war in Ukraine and its aftermath alone have caused a lot of unrest in financial markets worldwide; The War on technology There is that too.

The latter is still ongoing. That America and Europe can no longer control the world at will is by no means universally accepted and in any case creates a playground full of underlying tensions. War is mainly waged on an economic level.

ASML

As is well known, the US wants to severely restrict technology exports to China. So it was known Reuters It has already been announced that the export ban on chip machines from ASML to China will be extended. According to well-informed sources, the US wants to further restrict the supply of (less advanced) DUV machines to six chip factories in China. ASML has to apply for an export license every time it wants to ship certain old machines.

The Biden administration wants to prevent China from further developing its own chip industry. ASML itself has previously indicated that comparable measures will have no impact on the outlook for this year and beyond.

However, CEO Wennink is right to comment on such measures. According to him, as China faces more pressure, it has stepped up efforts to develop lithography machines that can compete with ASML. And, as he added cynically, the laws of physics are the same all over the world.

AI chips

Maybe so, but Washington wants to further restrict the sale of AI chips. That could hurt sales of less powerful chips that Nvidia designed earlier this year specifically for export to China to avoid mandatory export licenses.

Maybe Nvidia can reduce the chips a bit more, but will they still be interesting to customers?

Nvidia’s stock price fell at least 2 to 3% on the news, but will investors really lose sleep over it? When you consider that the stock price has nearly tripled this year, that’s not too bad. So Nvidia is like a spider in an ever-expanding AI web.

Globalization

A consequence of the war on technology is the trend towards globalization. Not only are Western companies moving part of their production facilities home or to friendly countries like Japan, but countries are also investing heavily in acquiring chip technology in the broadest sense of the word.

In that light, the European Union, the United States, Japan and India have agreed to provide more than $100 billion in subsidies to encourage chipmakers to invest in factories in those countries.

Nvidia has an advantage in any case. The company says it wants to be an international company and an investment in Europe is a perfect fit.

No doubt, Europe will try to convince the company with the necessary subsidy. After all, the European Parliament has approved a plan for investments totaling 43 billion euros in the European chip industry to double Europe’s eroded market share in the chip industry.

That’s a pittance compared to the $280 billion the Biden administration has earmarked for such investments. With the European CHIPS Act, Europe should no longer be dependent on China and the US, and start with the development in the field of artificial intelligence – or rather: start.

Martine Hafkamp is the Managing Director of Fintessa Asset Management. Fintessa It is an independent, independent and specialist property management office from Bourne, and a two-time Cowden Steer winner.

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