Tag: #usa

US Chip Makers Hit by New China Export Rule

Shares of major chipmakers Nvidia and AMD have fallen amid concerns of new US restrictions on the sale of artificial intelligence chips to China.

Nvidia says the US government requires a new licence, effective immediately, to address the risk of chips being “used in, or diverted to a ‘military end use’… in China and Russia”.

There are fears the rule could lead to millions of dollars in lost revenue.

Shares of both chipmakers slipped in after-hours trading in New York.

Nvidia’s shares were down by 6.6% while AMD slipped 3.7%.

The new restrictions are a “gut punch for Nvidia”, Dan Ives of Wedbush Securities told the BBC.

Chinese officials have firmly opposed the latest move. According to state media, “actions from the United States deviated from the principle of fair competition and violated international economic and trade rules”.

In a statement, Beijing said “The US side should immediately stop its wrongdoing, treat companies from all over the world including Chinese companies fairly, and do more things that are conducive to the stability of the world economy.”

The US Commerce Department told the BBC it was “not in a position to outline specific policy changes at this time”.

“We are taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and end-users to protect US national security and foreign policy interests,” a Commerce Department spokesperson said.

“This includes preventing China’s acquisition and use of US technology in the context of its military-civil fusion program to fuel its military modernisation efforts, conduct human rights abuses, and enable other malign activities.”

In a US regulatory filing on Wednesday, Nvidia said the new licence requirement would hit exports of its A100 and H100 chips, which are designed to speed up machine learning tasks, and the systems which include them.

Around $400m (£345.2m) in sales to China could be affected, Nvidia added, “if customers do not want to purchase the company’s alternative product offerings or if the (US government) does not grant licenses in a timely manner or denies licenses to significant customers”.

A Nvidia spokesperson told BBC it was liaising with customers in China “to satisfy their planned or future purchases with alternative products”.

Meanwhile, an AMD spokesperson said the rules, which would prevent the shipment of its MI250 chips to China, were not expected to have “a material impact” on business.

Both Nvidia and AMD halted sales to Russia after the invasion of Ukraine in February.

Analysts said the US requirements could make it more difficult for China to acquire chips for advanced computing.

It could also affect the earnings of US manufacturers such as Nvidia and AMD, said Mario Morales, a California-based analyst at market intelligence firm IDC.

“Both companies have a large exposure to China and could see more impact going forward, especially if China chooses to retaliate,” Mr Morales said.

Rising tensions

Last week, Nvidia reported a revenue of $6.7bn in the second quarter, which was significantly lower than forecasts.

However, it said revenue from its data centre business – which produces computer chips – surged by 61% from a year earlier.

“This is really a shot across the bow at China and it’s really going to fan those flames in terms of geopolitical (tensions). Nvidia’s caught in the crossfire,” Mr Ives said.

The US and China are locked in a long-running dispute over trade and technology.

Tensions between the world’s two biggest economies rose earlier this month, after US politician Nancy Pelosi made a controversial visit to Taiwan.

China sees the self-ruled island as a part of its territory and insists it should be unified with the mainland, by force if necessary.

September 3, 2022
Investment Flow to Africa Reached a Record $83 Billion
European investors remained by far the largest holders of foreign assets in Africa, led by the United Kingdom ($65 billion) and France ($60 billion).

Southern Africa, East Africa and West Africa saw FDI flows rise; flows in Central Africa remained flat, and North Africa declined.

Foreign direct investment (FDI) to African countries hit a record $83 billion in 2021, according to UNCTAD’s World Investment Report 2022. This was more than double the amount reported in 2020 when the COVID-19 pandemic weighed heavily on investment flows to the continent.
Despite the strong growth, investment flows to Africa accounted for only 5.2% of global FDI, up from 4.1% in 2020. While most African countries saw a moderate rise in FDI in 2021, around 45% of the total was due to an intrafirm financial transaction in South Africa.

The World Investment Report focuses on trends in foreign direct investment (FDI) worldwide, at the regional and country levels, and measures to improve its contribution to development.

It also analyses global value chains and the operations of multinational enterprises, with special attention to their development implications. Below are key highlights and statistics from the report.

European investors remained by far the largest holders of foreign assets in Africa.

Top 10 investor economies by FDI stock, 2016 and 2020

Southern Africa, East Africa and West Africa saw flows rise; flows in Central Africa remained flat and in North Africa declined:

According to the report, the largest investors by the number of projects in Africa were led by the United Kingdom ($65 billion) and France ($60 billion). Other countries on the top 10 list include the Netherlands, the United States, China, Italy, Singapore, Switzerland, and India. Additionally, South Africa remained the most extensive investor in other African countries.
Southern Africa, East Africa and West Africa saw flows rise; flows in Central Africa remained flat and in North Africa declined:
WIR2022-Africa-FDI-flows-figure-cropped
FDI to Southern Africa increased almost tenfold to $42 billion

FDI to Southern Africa jumped to $42 billion due to a large corporate reconfiguration in South Africa in the third quarter of 2021. The strong increase was due primarily to a large corporate reconfiguration in South Africa – a share exchange between Naspers and Prosus in the third quarter of 2021.

Investment flows to Mozambique grew by 68% to $5.1 billion. Meanwhile, investment flows to Zambia remained negative at -$457 million, a steep fall from -$173 million in 2020, due mostly to a $1.5 billion copper mine divestment by Swiss-based Glencore to state-owned ZCCM Investments Holdings.

West Africa sees FDI increase by 48% to $14 billion

FDI in West Africa increased by 48 per cent to $14 billion. Nigeria saw its flows double to $4.8 billion, mainly from the resurgence in oil investment and expansion in gas. International project finance deals in the country jumped to $7 billion, with some large projects in residential and commercial real estate projects.

Flows to Ghana rose by 39 per cent to $2.6 billion, owing to projects in extractive industries. At the same time, Senegal also saw a notable 21% increase in FDI, which reached $2.2 billion. The country registered a 27% rise in announced greenfield projects.

Investment flows to East Africa increased by 35% to $8.2 billion

FDI to East Africa grew by 35 per cent to $8.2 billion. Flows to Ethiopia reached $4.3 billion due to a tripling of Chinese investment. FDI to Uganda rose by 31 per cent to $1.1 billion, while Tanzania’s FDI rose by 35 per cent to $922 million.

FDI to North Africa declined by 5% to $9.3 billion in 2021

Flows to North Africa fell by 5 per cent to $9 billion. Egypt saw its FDI drop by 12 per cent as large investments in exploration and production agreements in extractive industries were not repeated. Despite the decline, the country was the second largest host of FDI on the continent. Flows to Morocco rose by 52 per cent to $2.2 billion.

August 30, 2022

Think Tank Calls for US Industrial Policy to Combat China’s Quest for Tech Dominance

If the United States wants to out-compete China in key technology markets, Congress and the Biden Administration must act now, maintained a Washington, D.C. think tank in a report released Monday.
“With the rise of China, the U.S. economic and technology environment has fundamentally and inexorably changed,” explained the report by the Information Technology & Innovation Foundation.
“America needs an advanced technology industrial policy to compete effectively,” it continued, “but that will require modernizing hidebound economic thinking that has long considered ‘industry policy’ to be anathema.”
The report called on government to take an active role in promoting industrial competitiveness and to formulate an advanced industry and technology strategy, which should include a set of policies and programs explicitly designed to support specific industries and technologies.
It recommended industries targeted by the policy meet four criteria:
• They must be one that without proactive government policy support would underperform, either in general or because of foreign competition.
• The United States must have some potential for success in the industry or technology because of existing assets and strengths.
• Success in the industry or technology must be important to achieving key national goals, such as national defense and security, energy security and climate, a better trade balance, or faster productivity growth.
• The firms in the industry should want support and be willing to invest at least some of their own resources in the efforts.
One Chip Fits All
ITIF President Robert D. Atkinson, who authored the report, explained that governments engaging in industrial policy has been given a bad rap by economists.
“Economists believe the market does everything right, what they focus on is allocation efficiency,” he continued. “So industrial policy is inherently bad because you are helping one industry over another. Potato chips or computer chips, every industry is equally important to them.”
“The notion that the government can’t do this is not born out by historical evidence in the U.S.,” he asserted. “The Internet alone would make up for any loses for the next 50 years.”
He explained that with industrial policy, the government is trying to invest in a sweet spot between areas the private sector won’t invest in because the risk is too high and areas so poor no one can make any money in them. “Government shouldn’t be substituting for the private sector, but it should be focusing on areas where the risk is a little higher and the payoff is higher,” he said.
“Government investments should yield big social benefits,” he continued. “We don’t expect the private sector to be thinking about social benefits. We don’t expect it to be thinking about U.S. competitiveness vis a vis China. It’s not their job. But it is the government’s job.”

Riddled with Failure
Doug Barry, senior director of communications and publications for the US-China Business Council, an organization of more than 200 American companies that do business with China observed that one argument against national industrial policies is that they’re less efficient than markets and lead to wasteful spending.
However, he added, “That argument does not give proper credit for massive government funding during the Sputnik era which contributed to many important commercial applications such as the Internet, GPS, and the smart phone.”
One reason the United States has shied away from industrial policy is because of innovation in the private sector, observed Richard Stiennon, founder and chief research analyst at IT-Harvest, a cybersecurity industry analyst firm in Birmingham, Mich.
There’s also another good reason not to have an industrial Governments that is able to identify future growth areas. In 2007, for example, an industrial policy wouldn’t have predicted we were going to dominate the market in high-end cell phones.”
Industrial policy — where the government targets certain industries for non-market support in order to achieve commercial outcomes within national borders that could not be achieved without that support — has been riddled with failure throughout U.S. history, contended Scott Lincicome, a senior fellow at the Cato Institute, a public policy think tank in the Washington, D.C.
It doesn’t work in the United States due to a combination of the U.S. economic system having relatively liquid capital markets, which means the market is pretty good at picking winners and punishing losers, and our political system, which is characterized by high turnover and intense lobbying.
Those two factors make industrial policy a pretty shoddy way to compete, regardless of what China is doing.”
Strategy Needed
Even without an industrial policy, there are measures the United States can take to keep a leg up on China.
“In the short run, we can reform our immigration policies to enable more foreign students to work here after finishing their studies,” Barry recommended.
“Similarly,” he continued, “we can make it easier to attract the best STEM minds from other countries. And we can improve STEM education in our primary and secondary schools.”
“To make innovation more geographically dispersed, we can create technology innovation centers in different parts of the county,” he added.
“We know where to focus: AI, quantum computing, robotics, bio tech, environmental technologies,” he said. “Whether or not it’s called industrial policy, the U.S. government needs to be more strategic in its thinking and action if we’re to avoid losing our competitive edge. Once lost, it will be very hard to regain it.

Tag: #usa

US Chip Makers Hit by New China Export Rule

Rising tensions

Investment Flow to Africa Reached a Record $83 Billion

FDI to Southern Africa increased almost tenfold to $42 billion

West Africa sees FDI increase by 48% to $14 billion

Investment flows to East Africa increased by 35% to $8.2 billion

FDI to North Africa declined by 5% to $9.3 billion in 2021

Think Tank Calls for US Industrial Policy to Combat China’s Quest for Tech Dominance