Stricter restrictions on the export of AI chips to China are being seriously considered by the United States

According to a report in the Wall Street Journal, the White House is considering imposing new restrictions on exporting artificial intelligence chips to China – a step that will mainly harm Nvidia, the strongest player in the field. Additional restrictions from the U.S. government were added to the existing microchip law, According to a report in the Wall Street Journal.

The publication stated that the U.S. Department of Commerce may announce, As early as this July, the halt to the export of AI chips. This move will result in a halt to shipments of chips created by Nvidia and other chip companies to customers in China.

In September, Nvidia said that the U.S. government asked the company to stop exporting two leading computer chips in the field of artificial intelligence to China, as a result of which it even modified them to be compatible with the requirements, but this too has now been ruled out from the U.S. point of view.

The U.S. government is considering imposing new export controls on artificial intelligence chips to restrict China’s access to military technology. The Biden administration is updating the existing export controls to make it more challenging for companies, including Nvidia and Advanced Micro Devices, to sell advanced chips to China. This move is expected to significantly affect Nvidia, which has already responded to previous controls by designing new graphics processing unit chips, namely the A800 and H800, to replace the restricted ones.

According to Nvidia CEO Jensen Huang in a recent interview with the Financial Times, the current export controls could have a devastating impact on the U.S. tech industry. Huang expressed frustration that these controls have restricted his company from selling its most advanced chips to China, leaving them with their “hands tied behind their back.”

Despite being slower than their predecessors, the A800 and H800 chips are crucial for powering AI research and development for major tech companies in China like Tencent, Alibaba, Baidu, and ByteDance. These companies have placed additional orders for Nvidia chips following the surge in generative AI technology.

President Joe Biden is taking steps to restrict China’s access to advanced technologies, such as AI chips that have numerous uses, from developing hypersonic weapons to modeling nuclear weapons. According to the FT, Chinese companies, including those on the U.S. blacklist, have been attempting to bypass export controls, such as renting access to A100 chips. National security adviser Jake Sullivan has described the Biden administration’s approach as creating a “high fence” around a “small yard” of critical technologies, namely AI, which could potentially allow the Chinese military to use American technology against U.S. security interests.

It has been alleged that the U.S. is attempting to limit the growth of China. In retaliation, China has prohibited Chinese infrastructure operators from purchasing chips from Micron, an Idaho-based semiconductor manufacturer. President Biden is also preparing to sign an executive order; that will create a screening mechanism for investment heading to China; to decrease the likelihood that U.S. investors will assist the Chinese military.

Recently, the U.S. and E.U. have emphasized that they are only attempting to reduce risk in targeted Sectors; rather than pushing for widespread disconnection. However, Chinese Premier Li Qiang criticized this policy, stating that any effort to de-risk from China is a “false proposition”.

The update on export controls is anticipated to happen sometime during the summer. This development is taking place as the United States and China work towards stabilizing their relationship, which has reached its lowest point since the establishment of diplomatic ties in 1979.

U.S. Secretary of State Antony Blinken recently met with Chinese President Xi Jinping, Foreign Minister Qin Gang, and top diplomat Wang Yi during his visit to China last week. Both leaders have described the meeting as “constructive”. However, President Biden’s recent impromptu remarks during a presidential campaign fundraising event, wherein he referred to Xi as a “dictator”, has caused a setback in the nascent efforts to improve the state of the relationship.

Nvidia Short (Sell)
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