The Biden administration announced that it plans to stop advanced Nvidia AI chips shipments to China to prevent Beijing from receiving cutting-edge U.S. technologies to strengthen its military. New rules will go into effect in 30 days, restricting a broader range of advanced chips and chip-making tools to Iran and Russia while blocking Chinese chip designers Moore Threads and Biren. The effort is designed to close loopholes in regulations released last October.
China will continue to import hundreds of billions of dollars worth of U.S. semiconductors annually. The response from the Chinese embassy is that it “firmly opposes” the new restrictions, adding that “arbitrarily placing curbs or forcibly seeking decoupling to serve (a) political agenda violates the principles of market economy and fair competition (and) undermines the international economic and trading order.”
Reuters reported just a few months ago that the very AI chips barred by prior regulations could be purchased from vendors in China’s Shenzhen. According to Georgetown University’s Center for Security and Emerging Technology, out of 97 individual AI chips procured via Chinese military tenders over an 8-month period in 2020, nearly all of them were designed by Nvidia, Xilinx, Intel, and Microsemi. AI improves the speed and accuracy of military decision-making, planning, and logistics.
Nvidia is currently selling almost every chip it can procure as worldwide demand outstrips supply, but will be hurt in the future as Chinese chip firms look elsewhere to fill any voids left by U.S. companies. The new rules will exempt most consumer chips used in laptops, smartphones, and gaming, though some will be subject to licensing and notification requirements by U.S. officials.
Chinese firms Biren and Moore Threads, whose U.S. suppliers will now face a tough licensing requirement before shipping products to them, are both startups founded by former Nvidia employees planning to compete with the chip giant.
The new measures also expand licensing requirements for exports of advanced chips to more than 40 additional countries that present risks of diversion to China and are subject to U.S. arms embargoes. The administration also hit 21 countries outside China with a licensing requirement for chip-making tools, over fears the equipment could be diverted to China and other national security concerns.