The Biden administration is considering further curbs on the sale of AI chips to China

The Biden administration is considering further curbs on the sale of AI chips to China

The Biden administration is placing additional curbs on China’s ability to access critical technology, including restricting the sale of high-end chips used to power artificial intelligence, according to five people familiar with the discussions. Is.

The move would curb sales to China of advanced chips made by companies such as Nvidia and Advanced Micro Devices, which are essential for data centers powering artificial intelligence.

Biden officials have said that China’s artificial intelligence capabilities could pose a national security threat to the United States by bolstering Beijing’s military and security apparatus. Concerns include the use of AI in guiding weapons, carrying out cyber warfare and empowering facial recognition systems used to track dissidents and minorities.

But such restrictions would be a blow to semiconductor makers including the United States, which still generate most of their revenue in China.

The deliberations were first reported by The Wall Street Journal. Shares of Nvidia fell nearly 2 percent in morning trading on Wednesday following reports of possible export cuts. The company has been one of the primary beneficiaries of the euphoria over artificial intelligence, with its share price rising nearly 180 percent this year.

Nvidia Chief Financial Officer Colette Kress told reporters on Wednesday that if such additional sanctions are adopted, Nvidia’s financial results will not be immediately affected. But in the long term, they will “permanently lose opportunities for American industry to compete and lead in one of the world’s largest markets,” he said. He said China typically generates 20 percent to 25 percent of the company’s data center revenue, which includes AI-enabling chips as well as other products.

Share prices of chip companies Qualcomm, Intel and Applied Materials fell more than 2 percent on Wednesday morning.

Intel declined to comment, as did the Commerce Department, which oversees export controls. AMD did not immediately respond to a request for comment.

Curbing sales of high-end chips would be the latest step in the Biden administration’s campaign to deny China advanced technology needed to power everything from self-driving cars to robotics.

Last October, the administration issued sweeping restrictions on the types of advanced semiconductors and chip-making machinery that can be shipped to China. The regulations were implemented across the industry, but they had particularly strong consequences for Nvidia. The company, an industry leader, was barred from selling its top-line A100 and H100 chips to China — which are efficient at running many of the processes needed to build artificial intelligence — unless it first obtained an exclusive license. Have you done

In response to those restrictions, Nvidia Started offering downgraded A800 and H800 chips in China last year.

The additional restrictions under consideration, which will come as part of the process of finalizing those earlier rules, would also bar the sale of Nvidia’s A800 and H800 chips and similarly advanced chips from competitors such as AMD and Intel, unless those Companies not licensed. The Department of Commerce will continue shipping into the country.

The deliberations have touched off an intense lobbying battle, with Intel and Nvidia working to further curtail their business.

Chip companies say that cutting them off from a key market like China would significantly reduce their revenue and reduce their ability to spend on research and innovation of new chips. In an interview with The Financial Times last month, Nvidia’s chief executive, Jensen Huang warned The US tech industry would be at risk of “immense damage” if it were cut out of trade with China.

The Biden administration is also discussing internally where to draw the line on chip sales to China. Their goal is to limit technological capability that could help the Chinese military guide weapons, conduct cyber warfare and empower surveillance systems, while minimizing the impact of such regulations on private companies.

The measure, which comes as the United States is also considering expanded restrictions on American investment in Chinese technology companies, is also likely to anger the Chinese government. Biden officials have been working to improve bilateral ties in recent weeks after falling out with Beijing after Chinese surveillance balloons flew over the United States earlier this year.

Secretary of State Antony J. Blinken traveled to Beijing this month to meet with his counterparts, and Treasury Secretary Janet Yellen is also expected to visit China soon.

During an appearance at the Council on Foreign Relations in New York on Wednesday, Mr Blinken said China’s concern that the US wanted to slow its economic growth was “a long part of the conversation we just had in Beijing.”

Chinese officials, he said, believe the US “wants to hold them back globally and economically.” But he denied that notion.

“How is it in our interest to allow them to get technology that they can turn around and use against us?” he asked, citing China’s growing nuclear weapons program, its development of hypersonic missiles and its use of artificial intelligence “potentially for repressive purposes”.

He said, “If they were in our place, they would have done exactly the same thing.” He said the US was imposing “very targeted, very narrowly defined controls”.

Nvidia’s valuation was boosted in light of the recent boom in generative artificial intelligence services, which can generate complex written answers to questions and images based on a single prompt. Microsoft has teamed up with OpenAI to generate results in its Bing search engine, creating the chatbot ChatGPT, while Google has created a competing chatbot called Bard.

As companies race to incorporate the technology into their products, demand has increased for chips like Nvidia’s that can handle complex computing tasks. That momentum has helped propel Nvidia’s market capitalization past $1 trillion, making the company the world’s sixth largest by value.

NVIDIA said in an August filing The $400 million in revenue from “potential sales to China” could be subject to US export restrictions, including sales of the A100, if “customers do not want to buy the company’s alternative product offerings” or the government grants licenses to allow The company will continue to sell the chip inside China.

Since the ban was imposed, Chinese chip makers have been trying to improve their supply chains and develop domestic sources of advanced chips, but China’s ability to produce the most advanced chips remains years behind the United States.

Joe Rennison And don clark Contributed reporting.

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