KUALA LUMPUR (Jan 20): Public Investment Bank Bhd foresees little chance that incoming US President Donald Trump’s administration will fully overturn the decision to impose restrictions on artificial intelligence (AI) chip exports and impose limits on the computing capacity that the US can ship.

For background, the US under the Biden administration last week proposed a new framework that would curb Nvidia’s AI chip exports, which command more than 80% of global market share. The move is part of a plan to divide access to advanced computing power to the US and retain its dominant status in AI by controlling supply markets, Public Investment Bank said.

In a note on Monday, it said it sees “little chance” for a complete overturn of that decision by the incoming Trump administration.

But Trump 2.0 could “potentially lower the bar” for the restriction in exchange for more favourable trade terms with all the trading partners, the investment bank said.

It also noted that tighter measures will push China harder to produce its own AI chips in the coming years.

“China is poised to make a significant stride in its chipmaking capabilities, with the production of 28 nanometer (nm) lithography equipment this month, a development that has taken many industry experts by surprise,” it said.

Public Investment Bank also said that despite rigorous US sanctions designed to block China’s progress in semiconductor technology, China is advancing rapidly.

Although the forthcoming 28nm lithography equipment may not be cutting-edge by global standards nor on par with ASML’s deep ultraviolet and extreme ultraviolet (EUV) lithography technology, it is a significant leap for China’s semiconductor industry.

In the latest development, China’s researchers are developing new approaches in EUV lithography, which could produce extreme EUV light with a central wavelength of 13.5nm, meeting the urgent demand for EUV light sources in the photolithography market, it added.

Public Investment Bank said most technology stocks have “overreacted” to the negative news flow and some may even have limited exposure to the data centre play.

It maintains an “overweight” call on the technology sector, with its top picks being Cloudpoint Technology Bhd (KL:CLOUDPT) and QES Group Bhd (KL:QES).

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