New Chip Restrictions will IMPACT Physical Security Market

Over the last two years, unprecedented circumstances have thrown the global supply chain into disarray. Of all the supply chain challenges, the lack of semiconductors or chip-tech shortage ranks high on the list for physical security manufacturers. 

With new restrictions aimed at China, physical security manufacturers must monitor the ongoing chip shortage situation and adapt to the latest market conditions.  

Physical secuirty equipment shortage.

Quick Summary:

Chip industry new export rules

USA China chip making

The Biden administration published new export controls designed to prevent China from access to chips made throughout the globe with U.S. equipment. 

They include restrictions on exporting some types of chips used in artificial intelligence and supercomputing and tighten rules on selling semiconductor manufacturing equipment to any Chinese company.

New chip rules (Summary)

The new rules require chip toolmakers KLA, LAM Research, and Applied Materials to stop shipments to Chinese-owned fabs that produce advanced logic chips. All three companies saw their share prices drop on Friday by more than 4%.

The rules block shipments of a broad number of chips for use in Chinese supercomputers, with a supercomputer defined as a system with more than 100 petaflops of computing power on a floor space of 6,400 square feet. The regulations also restrict the export of U.S. equipment to Chinese memory chip makers.

Chipmaking gear restrictions cover the production of the following:

  • Logic chips using so-called nonplanar transistors made with 16-nanometer technology or anything more advanced than that. Generally speaking, the smaller the nanometers, the more capable the chip.
  • 18-nanometer dynamic random access memory chips.
  • Nand-style flash memory chips with 128 layers or more.

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Nonsecurity analysts sound the alarm

The new rules have made even nonsecurity analysts sound the alarm. 

YouTube financial influencer, “MeetKevin“, speculated that some of the new rules could devastate the United States chip makers like Nvidia and AMD and have significant implications for companies like Tesla. He claims that some analysts see the new rules as “the biggest hit to chips and Chip trade since the 1990s, maybe even a new tech Cold War.”

IMPACT on Physical Security Manufacturers

Semiconductors, also known as ‘chips’, have been in low supply since 2020. As a result, manufacturers have been restricted to producing fewer products that require these chips.

Even before these sweeping measures, since 2019, the National Defense Authorization Act (NDAA), prohibited federal agencies, their contractors, and grant or loan recipients from procuring or using “telecommunications and video surveillance services or equipment” from several specific Chinese companies.

The companies named in Section 889 were Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company and their subsidiaries and affiliates, all of which have significant partnerships and relationships in the U.S.

@DavidSecurity Final thoughts

With so many global challenges, there is no simple solution to the shortage of semiconductors and the escalating costs. However, there are practical actions that every original equipment manufacturer (OEM) and security integrator can take to navigate the ongoing chip shortage situation.

The ongoing chip crisis will translate into accelerating cloud adoption, hybrid multi-cloud architecture and virtual infrastructure solutions. In short, cyber-physical convergence will only gain more speed!

Stay tuned, Stay Ready, Stay Safe! 

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