News emerged earlier this week that Intel had paused shipments to Inspur, the world's #3 server vendor, and #1 server vendor in China. The U.S. Department of Defense recently added Inspur to a list that outlines 20 companies it says are controlled by the Chinese military, and the U.S. government also placed new restrictions on Hong Kong that curtail its preferential treatment as a shipping hub into China. The new restrictions end the export license exemptions for products flowing through Hong Kong, which has long served as a safe conduit for semiconductor products to ship into China.
Today Inspur told Chinese press that Intel had resumed shipments, an important development given that the company bought $2.5 billion in chips from Intel in 2019, and we followed up with Intel. We also pinged Nvidia and AMD for comment on the status of their business with Inspur.
Intel representatives confirmed to Tom's Hardware the reports that it has resumed shipping products to Inspur. Still, in keeping with the company's practice of not disclosing details of its business with individual customers, Intel would not comment on which specific products have already resumed shipping, or in what quantities.
Intel's previous statements on the matter outlined a phased resumption of shipments, with 'some' items shipping within two weeks, and 'others' within a matter of days. Given that Intel has already resumed shipments, it appears it is underway with its plan of a phased resumption of shipments. However, neither Intel nor Inspur have confirmed that Intel will be able to resume shipping all products it previously supplied to Inspur.
It's unclear if the U.S. government will eventually add more targeted restrictions against Inspur, much like when the Obama administration blocked Intel from selling Xeon processors to China in 2015 over concerns the chips were fueling the country's nuclear programs.
Earlier this week, we reached out to AMD to see if it was still shipping products to Inspur. AMD responded that there are no changes for the company, as its business relationship with Inspur complies with all relevant laws and regulations.
Nvidia responded to our queries with the following statement: "Yes, Inspur is a customer of NVIDIA. However, the products we sell to Inspur focus on consumer and enterprise." The statement implies that the new regulations haven't impacted Nvidia because of Inspur's spot on the list of companies controlled by the Chinese military. However, it's unclear if Nvidia has encountered any difficulties shipping products through Hong Kong.
The continued tensions of the trade war shine a light on China's reliance on American semiconductor technology. Past actions by the U.S. have largely prevented China from achieving the technical know-how and equipment to develop its own competitive chips through acquisitions and mergers. However, it's noteworthy that the prior restrictions on Xeon processor sales to China led the country to design its own SW26010 processors to power the Sunway TaihuLight supercomputer. That system was the world's fastest from 2016 to 2018.
The continued disruptions to processor supply chains, shipments, and partnerships (the U.S scuttled AMD's THATIC joint venture last year) will certainly redouble China's already-expansive efforts to develop its own indigenous processor production. Those efforts aren't going well, though. A recent report from IC Insights claims that China will not reach its goal of 70% self-sufficiency in the semiconductor market by 2025, instead reaching only 1/3 of its initial target within that time frame.
