A prominent technology trade group has urged the Biden administration to reconsider a proposed rule that would restrict global access to US-made AI chips, warning that the measure could undermine America’s leadership in the AI sector. The Information Technology Industry Council (ITI), representing major companies like Amazon, Microsoft, and Meta, expressed concerns that the restrictions could unfairly limit US companies’ ability to compete globally while allowing foreign rivals to dominate the market.
The proposed rule, expected to be released as soon as Friday, is part of the Commerce Department’s broader strategy to regulate AI chip exports and prevent misuse, particularly by adversaries like China. The restrictions aim to curb the potential for AI to enhance China’s military capabilities. However, in a letter to Commerce Secretary Gina Raimondo, ITI CEO Jason Oxman criticised the administration’s urgency in finalising the rule, warning of ‘significant adverse consequences’ if implemented hastily. Oxman called for a more measured approach, such as issuing a proposed rule for public feedback rather than enacting an immediate policy.
Industry leaders have been vocal in their opposition, describing the draft rule as overly broad and damaging. The Semiconductor Industry Association raised similar concerns earlier this week, and Oracle’s Executive Vice President Ken Glueck slammed the measure as one of the most disruptive ever proposed for the US tech sector. Glueck argued the rule would impose sweeping regulations on the global commercial cloud industry, stifling innovation and growth.
While the administration has yet to comment on the matter, the growing pushback highlights the tension between safeguarding national security and maintaining US dominance in the rapidly evolving field of AI.
US stock markets climbed to one-week highs on Monday, driven by gains in semiconductor stocks and optimism over AI investments. Reports suggesting that Donald Trump’s incoming administration may adopt a more selective approach to tariffs, rather than broad measures, also helped boost investor confidence. The Dow Jones Industrial Average rose 0.41%, the S&P 500 gained 1.02%, and the Nasdaq Composite surged 1.53%, with automakers and tech stocks leading the rally.
Semiconductor shares saw strong gains after Microsoft announced an $80 billion investment in AI-enabled data centres, while Foxconn posted better-than-expected quarterly revenue. Nvidia climbed 3.5%, AMD gained 2.8%, and Micron Technology surged 9.6%, pushing the Philadelphia Semiconductor Index to a two-month high. Meanwhile, the Russell 2000 index, which tracks small-cap companies, added 0.7% as investors weighed economic data and Federal Reserve policy signals.
Investors are closely watching monetary policy developments, with the Federal Reserve expected to provide further guidance on interest rate cuts later in the week. While Trump’s proposals could support corporate earnings and economic growth, concerns remain over potential inflationary pressures. US markets will be closed on January 9 for a national day of mourning in honour of former President Jimmy Carter.
GlobalFoundries and IBM announced on Thursday that they have resolved their legal dispute over alleged contract breaches and misuse of trade secrets. The confidential settlement ended lawsuits in which IBM accused GlobalFoundries of violating a $1.5 billion contract for high-performance chips. At the same time, GlobalFoundries countered with claims that IBM misused its trade secrets during partnerships with Intel and Japan’s Rapidus consortium.
The legal conflict stemmed from GlobalFoundries’ 2015 acquisition of IBM’s semiconductor plants, a deal that was later scrutinised in court. Despite the contentious history, the companies stated that the settlement opens doors for potential collaboration, signalling a move beyond their acrimonious past.
GlobalFoundries, backed by Abu Dhabi’s sovereign wealth fund Mubadala, has also expanded its semiconductor footprint. In November, the US Commerce Department awarded the chipmaker $1.5 billion to bolster New York and Vermont production. This financial boost aligns with the broader US push to strengthen domestic semiconductor manufacturing amid global supply chain challenges.
Taiwan Semiconductor Manufacturing Co (TSMC) has commenced mass production at its first factory in Kumamoto Prefecture, Japan. The facility manufactures 12 to 28-nanometer chips used in cars and image sensors, serving clients such as Sony Group and Denso Corp. Strengthening supply chains for critical goods is a priority for Japan, which views domestic chip production as vital for economic security amid geopolitical tensions.
TSMC plans a second factory in Kumamoto to produce advanced 6-nanometer chips, with construction set to begin by March 2025 and operations expected by late 2027. The Japanese government has pledged over 1 trillion yen in subsidies to support these initiatives, highlighting the strategic importance of reducing dependence on Taiwan’s chip supply.
Kumamoto Governor Takashi Kimura has also urged TSMC to consider a third plant in the prefecture, reflecting the region’s commitment to becoming a hub for semiconductor production. These developments underscore Japan’s determination to secure its technological future.
China’s semiconductor industry has seen a significant rise in merger and acquisition (M&A) activity in 2024, with 31 deals disclosed so far. Over half were announced after September, signalling a surge in activity during the latter part of the year. Nearly half of these transactions focused on semiconductor materials and analog chips, key areas driving innovation and growth.
Notable companies in the analog chip sector, such as Convert, Halo Microelectronics, BPS, and Novosense, played pivotal roles. For instance, BPS acquired controlling shares in Convenient Power to strengthen its power management chip offerings. This move highlights the growing synergy in product lines for mobile and automotive applications while expanding customer bases and supply chain networks.
Semiconductor materials companies also showed robust activity, with seven deals disclosed. Transactions included upstream silicon wafer manufacturers like Li-on and TCL Zhonghuan, as well as raw material providers such as Grandit. JCET, a major semiconductor packaging firm, made headlines with its acquisition of SanDisk Semiconductor and its subsequent control transfer to China Resources Group.
Digital circuits lagged behind in M&A activity, recording only two transactions. Among these, GigaDevice secured a 70% stake in Xysemi for RMB 580 million. Analysts note the dominance of analog chips and materials in reshaping China’s semiconductor industry.
A German court has ordered Signify, the world’s largest lighting maker, to recall and destroy certain products sold since 2017, citing patent infringement claims made by Seoul Semiconductor, a South Korean firm. The Düsseldorf court also ruled that Signify could face fines of up to €250,000 ($259,925) for each violation of the order, according to a statement from Seoul Semiconductor.
Signify, headquartered in the Netherlands and spun off from Philips in 2016, has not yet responded to requests for comment. The court ruling adds to the challenges faced by the company, which has a global reputation in the lighting industry.
Seoul Semiconductor, a leader in light-emitting diode (LED) technology, invests heavily in innovation, allocating about 10% of its revenue to research and development. The company boasts a portfolio of over 18,000 patents and has pursued legal action against multinational corporations to protect its intellectual property rights.
The Biden administration has initiated a trade investigation targeting Chinese-made legacy semiconductors, which power everyday goods like cars and telecom equipment. This ‘Section 301’ probe aims to address concerns about China’s state-driven expansion in chip manufacturing, which US officials warn could harm American semiconductor producers. Departing President Joe Biden had already imposed a 50% tariff on Chinese semiconductors, set to take effect 1 January, while tightening export controls on advanced AI and memory chips.
Commerce Secretary Gina Raimondo revealed that Chinese legacy chips account for two-thirds of semiconductors in US products, with many companies unaware of their origin—a finding she called alarming, particularly for the defence industry. US Trade Representative Katherine Tai stated that China’s subsidised chip pricing threatens global competition, enabling rapid capacity growth and undercutting market-oriented producers.
China’s commerce ministry has criticised the probe, calling it protectionist and a potential disruptor to global supply chains. Meanwhile, a public hearing on the issue is scheduled for March, with the probe expected to conclude within a year. The investigation follows the COVID-19 pandemic’s impact on semiconductor supply chains, prompting the US efforts to bolster domestic chip production with $52.7 billion in subsidies.
As the Biden administration transitions to President-elect Donald Trump’s leadership in January, this probe may offer Trump an opportunity to escalate tariffs on Chinese imports, echoing the trade practices he implemented during his prior term. Critics, including the US tech industry, have urged officials to approach the investigation collaboratively to avoid further disruption.
Samsung Electronics, Texas Instruments, and Amkor Technology are set to receive a combined $6.75 billion in chip manufacturing incentives from the US Commerce Department. The funding aims to bolster domestic semiconductor production and strengthen the supply chain.
Samsung will receive up to $4.745 billion, slightly reduced from the initial $6.4 billion estimate, reflecting scaled-down investment plans. The South Korean tech giant plans to invest $37 billion by 2030 to build chip production facilities, a research centre, and a packaging site. These projects are expected to solidify the US as a hub for advanced semiconductor manufacturing.
Texas Instruments has secured up to $1.61 billion for expanding its chip production facilities in Texas and Utah. The company is investing over $18 billion through 2029, creating 2,000 manufacturing jobs. Amkor Technology will receive $407 million to help build a $2 billion semiconductor packaging plant in Arizona, its largest in the US. This facility will cater to chips for autonomous vehicles, 5G/6G, and data centres.
These awards form part of a broader $39 billion subsidy programme for domestic semiconductor manufacturing. Over $33 billion of the allocated funding has now been finalised, with the US positioned as the sole nation hosting all five leading-edge chipmakers.
The UK’s Competition and Markets Authority (CMA) has voiced concerns over Synopsys’ proposed $35 billion acquisition of Ansys, claiming the deal could harm innovation, reduce product quality, and increase costs in the semiconductor design and light-simulation software markets. The regulator fears diminished competition could negatively impact UK businesses and consumers, particularly in sectors such as artificial intelligence and cloud computing, which rely heavily on semiconductor technology.
Synopsys, a leader in chip design software, announced the acquisition in January, aiming to combine its tools with Ansys’ diverse software offerings, used in industries ranging from aerospace to consumer goods. However, the CMA has highlighted risks of reduced consumer choice and a potential stifling of advancements in the sector. If these concerns are not adequately addressed, the regulator may initiate an in-depth investigation into the merger.
In response, Synopsys has proposed selling its optical solutions business to Keysight Technologies, a move it believes will satisfy the CMA’s concerns. A company spokesperson expressed confidence in resolving the regulatory hurdles and expects the deal to close in the first half of 2025. The CMA’s final decision could shape the future landscape of competition in the semiconductor and simulation software industries, as global demand for advanced technologies continues to grow.
China has enacted new regulations asserting state ownership over rare earth materials, critical for semiconductor production, with a rule effective from October 1. Additionally, on December 3, the Ministry of Commerce announced a ban on the export of dual-use items such as gallium, germanium, and antimony to the US. These moves are expected to impact industries reliant on these materials, especially solar cell production and semiconductor manufacturing.
As the world’s largest supplier of rare earths, China has long dominated the market due to its lax environmental regulations, which allow for large-scale extraction and refining. However, with many countries looking to reduce their dependency on China, the long-term effectiveness of these export restrictions may diminish. Nations like the US and Australia are expanding their rare earth production lines, and efforts to recycle rare earth materials are also gaining traction.
Despite these efforts, challenges remain in replicating China’s refining capabilities, as many countries are limited by technical and environmental obstacles. Notably, the US has partnered with Australia’s Lynas Corporation to build a rare earth extraction facility, aiming to strengthen its supply chain.
The future of the rare earth market may shift toward the development of substitute materials, although creating viable replacements is a time-consuming process. In this ongoing battle, China has already secured patents for some high-performance materials that could serve as alternatives, indicating that the competition could soon turn to technological innovation and patent rights.
