A set of policies aimed at limiting the export of cutting-edge artificial intelligence (AI) chips and chip-making equipment were recently released by the Biden administration. The main goal of these policies is to stop China from obtaining cutting-edge American technologies, especially for military uses. These regulations, which are expected to go into force in 30 days, also broaden the nations that are subject to sanctions to include Iran and Russia. Moore Threads and Biren, two Chinese chip designers, are also prohibited under the restrictions.
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Gina Raimondo, secretary of commerce, emphasized the need to prevent China from obtaining “advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers critical to (Chinese) military applications.” She said that the administration’s goal was not to undermine China’s economy, saying that the country will continue to import semiconductors from the U.S. worth billions of dollars. The Chinese embassy responded by opposing the new limitations vehemently, claiming that they went against the rules of fair competition and threatened the global trading and economic system.
Given worries about the role of U.S. technology in enhancing China’s military capabilities, the announcement of these additional restrictions shows the difficulties the Biden administration has experienced in limiting the flow of cutting-edge semiconductors and chipmaking equipment into China. According to a Georgetown University analysis that was published by Reuters, nearly all 97 of the individual AI processors that the Chinese military purchased in 2020 were created by businesses including Nvidia, Xilinx, Intel, and Microsemi. AI skills, powered by cutting-edge semiconductors, supercomputers, and technology, are essential for improving military logistics and decision-making.
Goal of these new regulations is to stop the export of some Chips to china
The goal of these new regulations is to stop the export of some chips to China, but Nvidia, a well-known American designer of AI chips, said it would abide by the regulations and didn’t expect any substantial effects on its short-term performance. Due to the continuous superior performance of its China-only processors, Nvidia’s business has flourished despite prior regulations. The company is currently battling a high demand situation where supply is insufficient.
On the other hand, as Chinese chip businesses look for alternatives to American firms, it can run into problems in the long run. Other AI chipmakers, such as AMD and Intel, also saw drops in their stock prices. Nvidia’s shares dropped by 3.7%. While most consumer processors used in gadgets like laptops, smartphones, and gaming systems are excluded from the new regulations, others will be subject to licensing and notification requirements by U.S. authorities.
Prior rules included a two-part examination
The prior rules included a two-part examination that assessed a chip’s computational performance as well as its inter-chip communication capabilities, which are important for AI supercomputers. Nvidia and Intel had created specific chips designed for the Chinese market that balanced strong computational capabilities with constrained communication rates in order to comply with these regulations. In order to avoid workarounds employing new “chiplet” technology, which China has recognized as essential to the future of its semiconductor sector, the new regulations set restrictions on the amount of computing power that a chip can fit into a given size.
The new regulations have a direct impact on the Chinese businesses Biren and Moore Threads, which were formed by former Nvidia workers. Before American vendors can send goods to either company, they will both need to pass stringent licensing standards. Moore Threads firmly disagreed with Biren’s inclusion on the trade blacklist, and Biren vehemently opposed it and stated that it would challenge the judgment.
License requirements for exports of advanced semiconductors to over 40 other nations are also expanded by these regulations
The license requirements for exports of advanced semiconductors to over 40 other nations are also expanded by these regulations, especially to those that pose a risk of being diverted to China and are subject to U.S. arms embargoes. Furthermore, the laws prohibit sending chips to subsidiaries of firms with global headquarters in China, Macau, and other nations subject to an arms embargo. In order to prevent the equipment from being diverted to China and for other national security reasons, the administration also applied license restrictions for chipmaking tools to 21 countries outside of China.
The semiconductor sector is currently attentively observing the effects of these new regulations. The Semiconductor Industry Association emphasized the value of cooperating with allies since extensive, unilateral limitations may endanger the American semiconductor industry without appreciably benefiting national security. Beyond their immediate economic effects, these actions have wider geopolitical and national security ramifications, particularly in the context of the ongoing competition between the United States and China in the technology sector.
