Impact on Nvidia as Biden restricts export of AI chips to China
The Biden administration is contemplating new export controls on chips for artificial intelligence, as Washington increases its efforts to make it harder for China to obtain technology with military applications.
The US commerce department is preparing to update sweeping export controls introduced last October in ways that could make it harder for companies such as Nvidia and Advanced Micro Devices to sell advanced chips to China, according to three people familiar with the situation.
The move would have a significant impact on Nvidia, which responded to the controls by designing new graphics processing unit chips called the A800 and H800 to replace more advanced chips that have been restricted restricted under the new guidelines.
Nvidia experiencing inertia
Nvidia’s chief executive Jensen Huang said that the existing export controls could cause “enormous damage” to the US tech industry. He said his company has its “hands tied” due to its inability to sell the most advanced chips to China.
While the A800 and H800 are slower than the chips they are replacing, they are still the most important technology that is powering AI research and development for China’s tech giants.
Tencent, Alibaba, Baidu, ByteDance and other Chinese groups placed additional orders with the Silicon Valley Group when the generative AI wave exploded in China this year. The new move would mark the latest effort by President Joe Biden to make it harder for China to obtain advanced technologies, including AI chips that can be used for everything from the research and development of hypersonic weapons to nuclear weapons modelling.
Chinese companies, including AI surveillance groups that are blacklisted by the US, were finding ways to circumvent the export controls in various ways, one example being to rent to A100 chips.
US national security adviser Jake Sullivan has described the Biden administration’s approach as creating a “high fence” around a “small yard” of critical technologies such as AI, which are capable of enabling the Chinese military to use American technology to harm US security interests.
Chinese operators are banned from buying Micron chips
Beijing accuses the US of trying to “contain” China. In a move in May that most experts saw as retaliatory, China banned Chinese infrastructure operators from buying chips from Micron, the Idaho-based semiconductor maker.
Biden is also preparing to issue an executive order that would create a mechanism to screen investment bound for China. This is in an effort to reduce the odds that US investors help support the Chinese military.
In recent months, the US and EU have stressed that they are engaging in “de-risking” in targeted sectors and not pushing for broader decoupling. Chinese premier Li Qiang this week criticised that policy, saying any attempt to de-risk from China was a “false proposition”.
Damage to the US tech sector
Chip wars with China risk ‘enormous damage’ to the US tech sector.
The update of export controls is expected to occur at some point over the summer. It will come as the US and China continue to attempt to stabilise their relationship, which has plummeted to its worst level since the countries established diplomatic ties in 1979.
US secretary of state Antony Blinken visited China last week for meetings with President Xi Jinping, Chinese foreign minister Qin Gang and Wang Yi, China’s top diplomat.
Xi and Blinken described the visit as “constructive”. However, the goodwill efforts suffered immediate setback when Biden last week described Xi as a “dictator” in off-the-cuff remarks at a presidential campaign fundraising event last week.
The US commerce department and Nvidia declined to comment on the expected update, which was first reported by the Wall Street Journal.
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