The Biden administration announced new semiconductor export rules on China intended to weaken its global influence. Cheddar News speaks with Ted Mortonson, Technology Strategist at Baird, who breaks down how the measures impact chip stocks in China and at home.  

Impact of Biden's Chips Export Curbs on China, Companies

and as the U. S. Is boosting its domestic semiconductor production capabilities, the biden administration announcing last week a sweeping set of export controls intended to weaponize the global semiconductor industry against china. It's gonna ban us companies from selling chips or equipment to china and could hobble its chip manufacturing industry by forcing companies that use us technology to cut off support for china entirely. So joining me now is ted Mortensen technology strategist at Bear, an independent investment bank and financial services company. Ted thanks so much for joining what is the biden administration trying to achieve with this new set of rules? Well, thanks for having me. First of all, I think this is kind of an unprecedented move where the biden administration is really somewhat focused on leveling the playing fields as it relates to uh I. P. And the recent uh Department of Commerce moves are pretty um unprecedented in the aspect where they are restricting three phases and in in recent weeks and months uh they have sequestered at least through some of the semi cap equipment names like a mat and lamb that they are unable to ship equipment below 14 nanometers. That's that's restriction number one, restriction, number two was just most recently that hit A. M. D. And NVIDIA on shipping next generation GPU S into china. And these G. P. U. S. Are generally used for high performance compute think military applications as well as advanced modeling and design. And the third one which isn't getting a lot of press is um as you go to these next generation nodes and uh for your viewers that that's viewed as three nanometers and below. Um There has been some talk about restricting some of the tool sets by cadence and synopsis and what's called gate all around and get all around without getting too in the weeds. Is that just a new architecture used at these next generation nodes And if you can't get the design tools essentially you can't get the units out the door. So this the whole intention of this is to leverage the U. S. Is core I. P. And also with the chips act is bring that production back to the U. S. So let's talk more about the impact. Obviously the impact that we might feel here at home and even potentially the impact abroad ted well you know uh this is a tough one because I don't think we're really in unchartered territory when you put these restrictions on china. Um uh Generally what happens is they just don't stand still. So um you know previously were in a globalization market where we derived a fair amount of our goods from from china into the U. S. Uh These three specific issues really put china's semiconductor future um somewhat very much impaired or restricted. So what we don't know right now is how they are going to react and I'm sure it's through some sort of their supply chain into the US and we just have to watch if that translates into higher costs or changes in the supply chain. So chip stocks, I mean really taking a beating and it's sort of interesting here because we all know that semiconductors are an absolutely crucial part that, you know, someone say the bedrock of the future. Those are some of the chip stocks that we're looking at there ted um but they've really been, you know, taking it on the chin underperforming since the pullback started and down pretty significantly today. So at least in the stock market we're feeling a short term impact, but long term. Do you think that this will be of benefit to some of these semiconductor companies long term the major macros, whether it be a i high performance compute five G IOT uh the silicon um a proliferation across industrial and auto, that hasn't changed. I think what the, what you're seeing in a reaction right now is very, very simplistic. The Fed is going up on rates and it is very much impacting demand and when you see bellwethers that include a mat, which lowered their Q three um revenues just recently by almost a billion. And their client revenues were down 40%. The whole pc consumer infrastructure is very much weakened then Micron reported last week an unprecedented decline in demand and inventory absorption. So we're going through a normal phase, I would say of lower demand and higher inventory. We've got to work through that also know vidia, which is probably one of the best technology company in the US. They were hit by not only crypto, but also consumer gaming. So we've seen some really big companies lower their earnings just because of that higher Fed rate profile as well as consumer demand. So we just gotta we just gotta get through it. We gotta get through it. I'm right there with you. That's good advice. Ted Mortensen technology strategist at baird. Thank you.