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Biden’s new Chinese chip constraints

Protocol Enterprise

Hello and welcome to Protocol Enterprise! Today: why the U.S. Commerce Department is set to impose export restrictions on software needed to design next-generation AI chips, how Airtable is trying to turn itself into an enterprise software vendor and AMD racks up another spectacular quarter at Intel’s expense.

Design flaw

In a bid to slow China’s ability to make advanced microchips, the U.S. is poised to implement an export ban on a specific piece of design software that is vital for producing the most-advanced chips needed for AI applications, Protocol has learned.

  • After weighing a potential ban for months, the White House has elected to order the Commerce Department to restrict the sale of electronic design automation software that’s necessary to take advantage of an emerging manufacturing technology.
  • That advanced technology, called gate all around, is necessary to produce chips that have greater computing power while at the same time using less energy.
  • The export ban is likely arriving soon: in the coming days or weeks, depending on the final details, which are still being worked out.
  • The White House and Commerce Department did not return a request for comment.

Export restrictions on chipmaking tools are nothing new. Already, the U.S. convinced the Netherlands to block ASML from selling its advanced extreme ultraviolet lithography systems to China.

  • EUV systems are needed to print the most-advanced chips and are exclusively manufactured by ASML.
  • According to William Reinsch, a former undersecretary of commerce, the U.S. has long preferred to block China’s access to the tools it needs to make advanced technology, while allowing the sale of the products themselves.
  • Last week, two tool-making companies — KLA and Lam Research — disclosed the Commerce Department had issued a notification that would block sales of equipment that’s used for 14-nanometer manufacturing and below.
  • It’s not clear how much it will cost the likes of Cadence and Synopsys, who make the widely used chip design software. Both have healthy businesses built around the software they are currently allowed to sell.

Tensions between the U.S. and China are high. House Speaker Nancy Pelosi arrived in Taiwan Tuesday, on an official visit that was aimed to reiterate the U.S.’s “unwavering commitment” to support the island country.

  • U.S.-China relations are strained to the point where TSMC chairman Mark Liu made a rare media appearance on CNN to discuss Taiwan’s fears.
  • “Nobody can control TSMC by force,” he said. “If you take military force or invasion, you will render TSMC’s factor[ies] not operable because this is such a sophisticated manufacturing facility. It depends on the real-time connection with the outside world: with Europe, with Japan, with the U.S. From materials, to chemicals, to spare parts, to engineering software, diagnosis, and it’s everybody’s effort to make this factory operable.”

— Max A. Cherney (email | twitter)


How global ecommerce benefits American workers and the U.S. economy: Alibaba — a leading global ecommerce company — is a particularly powerful engine in helping American businesses of every size sell goods to more than 1 billion consumers on its digital marketplaces in China. In 2020, U.S. companies completed more than $54 billion of sales to consumers in China through Alibaba’s online platforms.

Read more from Alibaba

Airtable … for apps?

Airtable’s “spreadsheet on steroids” quickly became a crowd favorite among designers and developers looking for a new productivity and collaboration tool. But according to CEO Howie Liu, the company harbors larger ambitions to become an enterprise software platform for application development, which could take it to a new level.

As Aisha Counts reported, Liu thinks that Airtable’s database can double as a foundation for application development tools, an insight he observed while working at Salesforce a decade ago. It has already signed up a few customers for this emerging part of its business, but the company faces an uphill struggle to convince IT buyers that it’s more than just a fancy spreadsheet.

— Tom Krazit (email | twitter)

A major difference

AMD told quite a different story Tuesday than its larger rival did last week, when it delivered its latest quarterly financial report card.

For the first time, AMD began breaking out its data center sales as a separate category, which used to be bundled with the company’s video game chip revenue among other things. AMD reported that data center revenue soared 83% to $1.5 billion, which CEO Lisa Su said was largely a product of its server processor sales.

But big data center chip sales were not enough to satiate Wall Street: shares fell nearly 6% in the extended session Tuesday, due to a slightly weaker-than-expected outlook for the coming quarter.

AMD’s server segment has made large gains in recent years. By contrast, Intel has stumbled. Last week Intel reported data center and AI sales of $4.6 billion, a 16% drop from the year-ago period.

In the earnings conference call, executives reiterated the company’s rosy outlook for the year, and said AMD was on track to grow overall revenue by 60% to roughly $26.3 billion. The CEO said that the company expects to achieve its target in spite of the “current macroeconomic environment.”

— Max A. Cherney (email | twitter)

Around the enterprise

IBM’s board of directors will investigate claims that its salespeople improperly reclassified mainframe deals as “cloud” or other newer software deals, which shareholders believe hid the true performance of IBM’s newer businesses.

There’s a downside to the Chips Act: Companies like Intel that had already invested in advanced chipmaking operations in China will not be allowed to add additional capacity there if they want their money, according to Bloomberg.


How global ecommerce benefits American workers and the U.S. economy: Using economic multipliers published by the U.S. Bureau of Economic Analysis, NDP estimates that the ripple effect of this Alibaba-fueled consumption in 2020 supported more than 256,000 U.S. jobs and $21 billion in wages. These American sales to Chinese consumers also added $39 billion to U.S. GDP.

Read more from Alibaba

Thanks for reading — see you tomorrow!

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