April 19, 2024
Biden Mulls Stricter AI Chip Export Controls to Prevent Third-Party Transfers to China

Biden Mulls Stricter AI Chip Export Controls to Prevent Third-Party Transfers to China

The United States government is exploring further measures to prevent Chinese developers from accessing American-made artificial intelligence (AI) semiconductor chips through third-party channels. According to a report from Reuters on October 13, sources close to the matter have indicated that the Biden administration is focusing on closing a loophole that allowed Chinese developers to acquire chips from the well-known Huaqiangbei electronics area in Shenzhen, China.

The sources suggest that the additional regulations concerning AI chips will be released this month and will extend restrictions that were previously applied primarily to leading U.S. players like Nvidia and AMD. These new rules are expected to apply more broadly to all companies involved in producing similar materials in the market. Over the summer, the U.S. government imposed additional rules on its major chip manufacturers, including Nvidia, which is a prominent player in the chip manufacturing industry. The rules included limiting exports of high-level semiconductor chips to “some” Middle Eastern countries, among other provisions.

However, U.S. regulators subsequently denied explicitly blocking exports of AI chips to the Middle East. In response, Nvidia cautioned that long-term revenue could be “harmed” if the company is “effectively excluded from all or part of China.” Most of Nvidia’s revenue is generated from the United States, China, and Taiwan, with less than 14% coming from all other countries combined.

According to Reuters’ sources, the Biden administration is also seeking solutions to address a loophole that allows Chinese entities to access U.S. cloud service providers like Amazon Web Services (AWS). The report suggests that the solutions for this issue appear to be “less clear.”

In July, U.S. officials reportedly began considering restrictions on Chinese companies’ access to cloud computing services like AWS to safeguard advanced technology.

The U.S. initially implemented export controls on its most powerful semiconductor chip technology in October 2022. Washington has since tightened these measures and is contemplating further actions to limit the computing power of chips available in the Chinese market. In response to the increasingly stringent measures from the United States, China announced in July that it would control exports of gallium and germanium, two primary materials used in the production of AI chips.

Image by rawpixel.com on Freepik

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