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US Reveals New Restrictions On Chinese Hardware Companies!

US Reveals New Restrictions On Chinese Hardware Companies!

. 4 min read

Last Friday, the US Commerce Department provided more details on new restrictions on American companies. According to these regulations, US companies will have to limit doing business with five Chinese corporations manufacturing supercomputers and supercomputer components.

Chinese entities regarding the restrictions of the US

According to the Commerce Department of the US, they will put the Wuxi Jiangnan Institute of Computing Technology, Sugon, and three other entities related to Sugon, into the “Entity List.” It is a list of businesses considered as threats to US national security.

Sugon - One of the five listed entities
Sugon – One of the five listed entities

When will it start to take effect?

The restrictions will start taking effects from Monday 24th, June 2019. Talking about this, the representative of the Commerce Department said the companies above are taking advantage of their supercomputers and components to reinforce military and nuclear usage.

Due to the seriousness of the issue, the US enacted bans on their domestic companies supporting and exporting components to the five companies above. They can only continue trading with those entities if they have a license.

Chinese side – What do they say?

The latest restrictions are the same as the recent ban of US on Huawei. You may wonder, “Why aiming at Sugon?” Well, it is one of the biggest data providers as well as supercomputers in China. Moreover, it’s also the leading entity manufacturing computer systems all over the world.

Sugon - One of the five listed entities
Sugon – One of the five listed entities

When the restrictions were out, Sugon immediately took actions by stating on its website that it has offered technical support for “China’s significant scientific equipment, the advancement of fundamental scientific research as well as industrial development.” But how? Sugon buys components from US corporations such as Intel (INTC), Nvidia Corp. (NVDA), and AMD (AMD).

Which US tech giants suffer losses from this ban?

When it comes to the effects of these decisions on US entities, AMD is currently the one who suffers losses the most. As we all know, in 2016, AMD decided to join a joint venture with a Chinese holding company.

AMD will suffer the most?
AMD will suffer the most?

Turn out, that company is a subsidiary of Sugon. As the partnership formed, they divided the original into two separate businesses. Both got their names from the Commerce Department’s brief. One of them is the Chengdu Haiguang Integrated Circuit, and the other is Chengdu Haiguang Microelectronics Technology.

In details

About the ownership of these two entities, the holding company and AMD agreed to share responsibilities and power. AMD will possess the most property of the Chengdu Haiguang Integrated Circuit. This means the Chinese company will have the right to exercise more control on the other.

According to the contract, AMD also gives their partner the intellectual property license for AMD microchip technology. That’s the origin of chips for servers available in China. In 2018, AMD already benefited $86 million in revenue just for licensing its intellectual property.

AMD's joint venture with the chinese company
AMD’s joint venture with the Chinese company

Thanks to those chips and servers, the Made in China plan will continue to proceed. If you’re wondering not knowing what the Made in 2025 program is, it’s a state industrial plan released in 2015 stating the future Chinese using and prioritizing their domestic technology products.

AMD Announcement

However, the recent decision has hit AMD hard. It’s now unclear how AMD solve this issue. In the latest emailed statement, an AMD spokesperson said that they were currently calculating the losses suffered from the decision, and will soon make an official announcement.

“AMD will adhere to the decisions of the Commerce Department, just as we have abided by US laws till now. We are estimating the details of the restriction to decide upcoming steps regarding our partners in China.”

– stated an AMD’s representative.

Still, Intel and Nvidia representatives refused to give comments.

The situation between the US and China

We all know that the cold war between the US and China has escalated fast in these recent years. However, when it comes to supercomputer dominance, the battle seems to be much more intense. The US has long proved its top position in developing supercomputers with the belief that they are essential for national security.

The term of supercomputers might not be strange to us anymore. They play a massive role in scientific research, weather prediction, and medical treatments. However, what you might not know is their use in military and nuclear modeling.

Supercomputers in the US and China

As you may know, the US has possessed the fastest supercomputer in the world since June 2018. Summit, situated in Oak Ridge National Laboratory in Oak Ridge, Tennessee, is the owner of this title. This supercomputer can run at 148 quadrillion — one million billion — calculations per second. Compared to iPhone Xs, Summit wins overwhelmingly as it’s nearly 30,000 times faster.

Summit - the fastest supercomputer worldwide
The US Summit – the fastest supercomputer worldwide

When it comes to supercomputers, China is one of the leading countries in the world. They had stayed at the first place of the chart continuously from November 2013 until June 2018. It’s incredible as no other countries at that time could surpass the consecutive win of the US. Among the top 500 supercomputers in the world, China possesses the most significant number of 219 systems. The US, on the other hand, only owns 116/500.

However, set the number aside, the US supercomputers’ horde occupies over 38.4% of the supercomputing power. Indeed. The US holds the two best systems in the world; each of these supercomputers covers 15.6% of the total power. About China, they only account for under 30%.