The U.S. government this week has issued guidance about banning semiconductor giants from exporting A.I. and advanced chips to China, in an attempt to prevent Chinese military and A.I. development. But Nvidia says U.S. officials backtracked on one part of that ban today, and will continue to allow the company to develop one of its A.I. chips overseas. However, there are still broad ramifications for the ban, including economic and consumer-focused issues. Vinh Vuong, CEO of Garrison Fathom, joins Closing Bell to discuss. 

Closing Bell

U.S. Bans Some A.I. Chip Exports to China, But Allows Nvidia to Continue

well US china relations when it comes to tech and semiconductors continuing to evolve with some chip making giant saying this week the U. S. Officials had ordered an export band on some advanced Ai chips. Well now in video saying today that the U. S. Government will allow it to continue developing one of its Ai chips in china. It's a big one for the company after it worn yesterday than an export ban would hamper business operations. So where does that leave other chipmakers? And could we see potential supply chain and economic disruptions? Well, joining me now is Ben bongs ceo of Garrison fathom A diversified holding company with a focus on long term strategies. Vin thanks for coming on. So let's start with in videos update this afternoon. What do you make of the U. S. Government's decision to backtrack on its earlier decision to ban these chip exports? Absolutely contradicting. And it shows you the lack of leadership by this administration as well as you know like the Fed, I mean all the Commerce Department and everyone else with the leadership shows you the past several years has been an absolute mess. You know to to to backtrack on this is just really disappointing. I mean for example semiconductors require rare earth minerals. And President biden signed an executive order in March for 100 days to review critical rare earth minerals that are needed to do semiconductors. But then we're in september well well over 100 days and there's still no solution. So bottom line the government has no clear strategic plan and by backtracking on this and take an attacking are us companies. It's just unbelievable. It's irresponsible and it's really hurting the economy. And I mean the video, you know the fact that it could possibly take a $400 million dollar hits just from the snap, you know, irrational decision. It's just really not good. Okay. So I do want you to walk through of in the impact on these individual semiconductor companies. I think we have a chart that will show a variety of different semiconductor stocks down pretty significantly today. I know you mentioned a. M. D. What is the fallout across the category of these different companies? Yeah, the fallout is pretty significant because there's a lot of uncertainty on what's gonna happen between us and china geopolitically as well as you know, they're the actual issues between us and China are not being actually resolved. So. So I think it's been much further fallout. You know, NASDAQ today is down quite significantly because all the technology we used to require these chips. So for the uncertainty right now, as an investor, I'm very concerned and these companies are very concerned because there's no clear direction from behind the scenes with the government. So the fallout will be much more significant and as an investor I'm definitely holding and I would recommend so as well. So walk me through the side of the U. S. Government here then. What was their thought process that caused them to act. Yeah. The thought process is really to try to limit china and Russia from having access to these ai chips. But we all know that china is famous for actually copying but they're not actually following through and actually executing well. So regardless of the black market they'll get these chips. Um but you know the fact that this backtracking the key things to remember is that all of the issued this they're also still allowing NVIDIA to be able to do R. And D. And to produce these chip in china. So it's very contradicting and there's no and there's no clarity. So you know, so as investors in these companies, everyone is disorganized and everyone is really confused. Um So you know, so for the near term right now the bottom line is you know, confusion. It's like economic effects and unless the administration get their act together along with the overall government there's just gonna be issues and semiconductor and the trickle. So what does this mean for geopolitical tensions? I mean already going back to the trump administration certainly very much on public display. We had seen china and the US become a bit combative at times at least with word. And certainly policy trade tariffs as well and that continuing throughout the biden administration to how does this set the stage for these geopolitical tensions that have already existed. Yeah things will get much worse. But I think china is going to inflict a bit more pain than we would, you know, for example. You know right now we're bending over backwards to work with china, the chinese listed companies to not be delisted but meanwhile china is increasing a lot of intensity um and scrutiny to a U. S. Company. So that's a big concern. So I see this really heavily escalating over the next several months especially as more lawmakers visit Taiwan as well as uh these uh these orders from the government irrational snap decisions last minute um that affects china so expect china to retaliate quite a bit. Um And the fact that you know the our two economies so integrated um and both economies are struggling right now um you know, each government is going to take advantage of that. Does this mean higher prices for consumers? I think a lot of consumers already a fearful scaling back on electronics because of higher prices. These chips crucial in every single electronics device from our iphones to our electric toothbrushes and our dishwashers for instance, could this lead to higher ticket prices sadly, yes. Um it's absolutely drive prices up. And the most important thing I mentioned before is that the critical minerals and other resources that are required to make all these electronics are going to price is gonna go up because china over the past decade has invested heavily into gathering these resources, whether it's in africa or other parts of the world that have a lot of these minerals um they're gonna use that as a weapon because the US does not have enough supply and we're actually finding from china and other resources. So you know the fact that we made the snap irrational decision on the semiconductor chips is a trigger for china is going to retaliate and hold these minerals as a stranglehold. Um So so expect prices to go up. I mean we need them and they need us. But I just escalating quite a bit. Is there any sort of compromise middle ground you think then that can be reached? I think the compromise will be actually both governments actually sit down and have a discussion and actually understanding that we both need each other. Uh And the U. S. In particular need to understand where china's goals are. You know, I'm a big believer in keep your enemies closer. Um So I think we should be more on part in understanding where china is coming from trying to work out more specifics economically as well as what their uh their intentions are so that we can leave our companies at peace. Um And then also figure out how we can negotiate deals to be able to make it happen. I mean the last administration, this administration are not helping at all to really truly do diplomatic actions and negotiating plans. Um That that that could be a win win situation. They're just making a little small but big economic impact moves. Um And being petty instead of actually sitting at the table and actually rolling out plans to work together. Okay, vin, I'm totally got to leave it there. Thank you for coming on the show. I know we can talk about this for a while. That's been Boeing's ceo of Garrison fathom.