Core Viewpoint - The article discusses the loopholes in the efforts by the U.S. and its allies to restrict China's advanced chip manufacturing capabilities, allowing China to purchase nearly $40 billion worth of cutting-edge chip manufacturing equipment [2][3]. Group 1: Legislative Actions and Recommendations - A bipartisan investigation by U.S. lawmakers revealed that existing export controls are insufficient, as Chinese entities can effectively collaborate to circumvent these restrictions [2]. - Lawmakers are advocating for nationwide controls on China, proposing a presumption of denial policy for licenses related to advanced and traditional chip manufacturing tools [2]. - The report calls for an expansion of the restricted entity list and a ban on all allied manufacturers from selling products to more Chinese military entities [2]. Group 2: Sales and Market Impact - The report highlights that last year, Chinese companies purchased $38 billion worth of equipment from five leading semiconductor manufacturing equipment suppliers, marking a 66% increase from 2022 [3]. - This figure represents nearly 39% of the total sales of Applied Materials, Lam Research, KLA, ASML, and Tokyo Electron [3]. - The sales to China have made the country increasingly competitive in the semiconductor manufacturing sector, impacting global human rights and democratic values [4]. Group 3: Industry Response and Coordination - Tokyo Electron's U.S. president noted a decline in sales to China this year due to new regulations and welcomed increased coordination between the U.S. and Japanese governments [4]. - The report suggests that allies should enhance coordination and broaden the scope of restrictions, including limiting components that China can use to manufacture its own chip-making tools [4]. - A senior researcher from the Foundation for Defense of Democracies emphasized that China is attempting to rewrite the entire supply chain, indicating a shift in the competitive landscape [4].

Core Viewpoint - The Chinese government has initiated two investigations against the U.S. regarding semiconductor trade policies, indicating a shift in strategy amid ongoing tensions in the semiconductor sector [1][6]. Group 1: Anti-Dumping Investigation - The Ministry of Commerce announced an anti-dumping investigation into U.S. semiconductor companies, focusing on general interface chips and gate driver chips manufactured using 40nm and above technology nodes [2][4]. - The investigation was prompted by the Jiangsu Semiconductor Industry Association, citing that U.S. manufacturers, including Texas Instruments, ADI, Broadcom, and ON Semiconductor, have been engaging in dumping practices with price reductions exceeding 300% and an average market share of 41% in China [2][4]. - The investigation period covers from January 1, 2022, to December 31, 2024, and aims to assess the impact of these practices on the domestic industry [2]. Group 2: Anti-Discrimination Investigation - The Ministry of Commerce has launched an anti-discrimination investigation against the U.S. for its restrictive measures on high-end chips, which are perceived as discriminatory and aimed at stifling China's technological advancements [5][6]. - The U.S. has implemented various restrictions, including tariffs and export controls, particularly targeting Chinese companies in the semiconductor and AI sectors, which has led to a significant impact on China's access to advanced technologies [6][7]. - The timing of the investigation is strategic, coinciding with recent U.S. actions to form a coalition against China and new technology restrictions imposed on Chinese firms [7][8]. Group 3: Anti-Monopoly Investigation - The National Market Supervision Administration has initiated an investigation into NVIDIA for allegedly violating commitments made during its acquisition of Mellanox Technologies, which raises concerns about compliance with anti-monopoly regulations [9][10]. - The investigation reflects a shift in China's regulatory stance towards foreign semiconductor companies, indicating a more assertive approach in enforcing compliance with local laws [10]. - NVIDIA's role in the semiconductor market is critical, as its products are foundational for advanced AI systems, making it a focal point in the ongoing U.S.-China tech competition [10][12]. Group 4: Broader Implications - The ongoing investigations and trade measures signify a deepening divide in the semiconductor ecosystem between the U.S. and China, with potential repercussions for global supply chains and market dynamics [1][12]. - The dual investigations may lead to increased tariffs or import bans on U.S. semiconductor products, prompting a shift towards domestic sourcing in China [4][8]. - The complex interplay of competition and interdependence in the semiconductor industry raises questions about the sustainability of current trade relationships and the future of technological collaboration [12].

Core Viewpoint - The U.S. government will revoke TSMC's exemption for shipping critical equipment to its factories in China starting next year, which may weaken TSMC's production capacity and lead to delivery delays [1][3]. Group 1: Impact on TSMC - TSMC announced that it received notification from the U.S. government regarding the revocation of its "Verified End User" (VEU) status for its Nanjing factory, effective December 31, 2025 [1]. - Following the revocation, TSMC will need to apply for export licenses to ship U.S. chip manufacturing tools to its factories in China, which could complicate operations [1][3]. - TSMC is committed to ensuring uninterrupted operations at its Nanjing factory while evaluating the situation and communicating with the U.S. government [1]. Group 2: Broader Industry Implications - The policy change poses risks to the operations of semiconductor giants in China, with potential delays in delivery due to uncertainties surrounding the speed of license approvals [3]. - TSMC's U.S.-listed American Depositary Receipts (ADRs) fell by up to 2.3% following the announcement, indicating market concern [3]. - Major suppliers to TSMC, including Applied Materials, ASML, Tokyo Electron, and KLA, also experienced stock price declines, reflecting broader market impacts from the export restrictions [3]. Group 3: U.S. Export Control Context - The U.S. government previously banned the sale of advanced process chips and manufacturing equipment to China, with exemptions granted to South Korean companies Samsung and SK Hynix, which are now also facing revoked exemptions [4]. - The U.S. Commerce Department plans to issue licenses to allow companies to continue operating existing facilities in China but will not permit capacity expansion or technology upgrades [4]. - The U.S. government's actions are seen as detrimental to the global semiconductor supply chain, with China expressing strong opposition and warning of necessary measures to protect its companies [4]. Group 4: Challenges in U.S. Export Licensing - The U.S. is facing a significant backlog of license requests, with thousands of applications from U.S. companies for global exports, including to China, currently stalled [5]. - Industry leaders are concerned that prolonged delays in license approvals will result in lost market share to competitors, as Chinese clients seek alternative suppliers [5]. - The lack of progress in the licensing process is causing frustration within the industry, with no clear timeline for when licenses will be issued [5].

Core Insights - Applied Materials shares fell over 10% in extended trading due to a weaker-than-expected outlook for the current quarter [1] - The company anticipates adjusted earnings of $2.11 per share and revenue of $6.7 billion, both below LSEG estimates of $2.39 per share and $7.34 billion respectively [1] Financial Performance - In the third quarter, Applied Materials reported a net income of $1.78 billion, or $2.22 per diluted share, compared to $1.71 billion or $2.05 in the same period last year [3] - The semiconductor systems division achieved $5.43 billion in sales, exceeding estimates and reflecting a 10% increase year-over-year [4] - The adjusted EPS was reported at $2.48, surpassing the estimated $2.36, while revenue was $7.3 billion against an estimate of $7.22 billion [5] Market Conditions - CEO Gary Dickerson highlighted that the current macroeconomic and policy environment is leading to increased uncertainty and lower visibility, particularly affecting the company's business in China [2] - The finance chief indicated a revenue decline in the fourth quarter due to capacity digestion in China and non-linear demand from leading-edge customers [3]