Investing.com – Jefferies analysts noted a Reuters report that said President Biden could impose new restrictions on AI chip production for China before his term ends on January 20.
The restrictions are expected to have two main components: preventing certain countries that help China in AI development from accessing AI chips and preventing foundries such as TSMC and Samsung (KS:) from manufacturing AI chips for Chinese companies.
Jefferies emphasized the high probability that these restrictions will target TSMC and Samsung, noting that “preventing TSMC and Samsung from making AI chips for China is highly certain to happen.”
Analysts highlighted that TSMC has already suspended production of 7nm chips for its Chinese customers pending more regulatory details.
The anticipated restrictions would involve a detailed definition of “advanced AI chips” based on factors such as process node, die size, and use of CoWos and HBM specifications.
Jefferies notes that these measures are intended to close existing loopholes and ensure compliance.
The restrictions are expected to particularly affect Chinese companies that design GPUs, ASICs and ADAS chips, such as Alibaba (NYSE:), Baidu (NASDAQ:) and Horizon Robotics.
Jefferies notes that this policy could face challenges in its implementation, especially with regard to the involvement of third countries.
They argue: “It will risk damaging US relations with these countries, and some of them are ‘delicate’ friends of the United States.”
Additionally, the company says the policy could strain international relations as it may be perceived as coercive.
Despite the potential difficulties, Jefferies believes the Biden administration is committed to tightening AI chip production regulations, which are unlikely to be rolled back by a potential Trump administration.