The U.S. will take steps to prevent American chipmakers from selling semiconductors to China that circumvent government restrictions, a U.S. official said, as part of the Biden administration’s upcoming actions to block more A.I. chip exports. The new rules, details of which Reuters is reporting for the first time, will be added to sweeping U.S. restrictions on shipments of advanced chips and chipmaking equipment to China unveiled last October. The updates are expected this week.
The new measures could significantly harm the business of chipmakers like Nvidia Corp NVDA.O, which sells the powerful graphics chips used in A.I. systems to help develop chatbots and other artificial intelligence programs. They will likely also hurt the companies that build the servers and other equipment needed to run these systems, such as Dell Technologies Inc. DELL.O, Hewlett Packard Enterprise, Super Micro Computer, and Chinese tech firms.
But the U.S. isn’t expected to shut off completely the flow of these chips to China. The new rules will close a loophole that allows Chinese firms to acquire some of the most potent consumer chips, even though shipping them directly to mainland China is illegal. The U.S. government will require companies to notify the Commerce Department when they fulfill orders for these chips and will decide on a case-by-case basis whether they pose a national security risk. The updated rules may also tighten the definition of an “AI-capable” chip.
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A second change is expected to limit the impact of the new rules by requiring that the government only target the most advanced chips, which are designed to be networked together in data centers and supercomputing facilities where companies train and run their A.I. models. That will leave the broader market of servers, GPUs for gaming, and smaller designs sold to businesses and individuals in China unaffected by the rules.
The update to the export rules is also expected to close a loophole that allows Chinese companies to acquire US AI chips through their foreign subsidiaries. The U.S. will require companies to notify the government when they have semiconductors that fall slightly below the guidelines and decide on a case-by-case case whether the chips pose a risk to national security. The changes will also remove a parameter that limits the speed at which A.I. chips can communicate with each other, a move that could make it more difficult for Chinese firms to develop their own homegrown artificial intelligence capabilities. These are the latest steps in a months-long tug-of-war between the U.S. and China over the growing power of the world’s most sophisticated technology. Both sides have raised alarms about the risks of A.I. systems being used by the other to steal military and commercial secrets. This tension has strained US-China ties even as the president seeks to boost high-tech manufacturing.