The United States strengthens China’s access to AI chips | ET REALITY


The Biden administration on Tuesday announced additional limits on the types of advanced semiconductors that American companies can sell to China, underpinning restrictions issued last October to limit China’s progress in supercomputing and artificial intelligence.

The rules appear likely to stop most shipments of advanced semiconductors from the United States to Chinese data centers, which use them to produce models capable of developing artificial intelligence. More American companies that want to sell advanced chips to China, or the machinery used to make them, will need to notify the government of their plans or obtain a special license.

To avoid the risk of advanced American chips traveling to China through third countries, the United States will also require chip makers to obtain licenses to ship to dozens of other countries that are subject to American arms embargoes.

The Biden administration maintains that China’s access to such advanced technology is dangerous because it could help the country’s military with tasks such as guiding hypersonic missiles, establishing advanced surveillance systems or breaking top-secret US codes.

Leading artificial intelligence experts have warned that the technology, if not managed properly, could pose existential threats to humanity.

But artificial intelligence also has valuable business applications, and tighter restrictions may hit Chinese companies that have been trying to develop AI chatbots such as ByteDance, the parent company of TikTok, or internet giant Baidu, industry analysts said. . In the long term, the limits could also weaken China’s economy, given that AI is transforming industries ranging from retail to healthcare.

The limits also seem likely to reduce the money that American chipmakers like Nvidia, AMD and Intel make selling advanced chips to China. Some chipmakers earn up to a third of their revenue from Chinese buyers and have spent recent months lobbying against tighter restrictions.

U.S. officials said the rules would exempt chips that were exclusively for use in commercial applications, such as smartphones, laptops, electric vehicles and gaming systems. Most rules will go into effect within 30 days, although some will go into effect sooner.

In a statement, the Semiconductor Industry Association, which represents major chipmakers, said it was assessing the impact of the updated rules.

“We recognize the need to protect national security and believe that maintaining a healthy American semiconductor industry is an essential component of achieving that goal,” the group said. “Overly broad and unilateral controls risk harming the U.S. semiconductor ecosystem without improving national security by encouraging foreign customers to look elsewhere.”

In a call with reporters on Monday, a senior administration official said the United States had seen people try to get around previous rules, and that recent advances in generative AI had given regulators more information about how so-called models work. of big language behind. was being developed and used.

Gina M. Raimondo, Secretary of Commerce, said the changes had been made “to ensure that these rules are as effective as possible” and that she expected the rules to be updated at least annually as technology advanced.

Referring to the PRC, he said: “The goal is the same as always, which is to limit the PRC’s access to advanced semiconductors that could drive advances in artificial intelligence and sophisticated computers that are critical to military applications of the People’s Republic of China. “

He added: “Controlling technology is more important than ever when it comes to national security.”

The stricter rules could anger Chinese officials as the Biden administration tries to improve relations and prepare for a possible meeting between President Biden and China’s top leader, Xi Jinping, in California next month.

The Biden administration has been trying to counter China’s growing dominance over many cutting-edge technologies by pumping money into new chip factories in the United States. At the same time, it has been trying to impose strict but narrow restrictions on technology exports to China that could have military uses, while allowing other types of trade to flow freely. US officials describe the strategy as protecting US technology with “a small yard and a high fence.”

But determining which technologies actually pose a threat to national security has been a contentious task. Major semiconductor companies such as Intel, Qualcomm and Nvidia have argued that overly restrictive trade bans can sap them of the revenue they need to invest in new plants and research facilities in the United States.

Some critics say the limits could also boost China’s efforts to develop alternative technologies, ultimately weakening U.S. influence globally. Chinese researchers have made significant progress in developing domestic versions of advanced chips, but experts say the country is still years behind Western semiconductor manufacturing capabilities.

The changes announced Tuesday appear to have particularly significant implications for Nvidia, the biggest beneficiary of the artificial intelligence boom.

In response to the first major restrictions imposed by the Biden administration on AI chips a year ago, Nvidia designed new chips, the A800 and H800, for the Chinese market that ran at slower speeds but could still be used by Chinese companies to train AI models. A senior administration official said the new rules would restrict those sales.

Nvidia has said China typically generates 20 to 25 percent of the company’s data center revenue, which includes products other than AI-enabled chips.

In addition to those expanded restrictions, the United States will create a “gray list” that will require makers of certain less advanced chips to notify the government if they are selling them to China, Iran or other countries subject to a U.S. arms embargo.

The administration also placed 13 Chinese companies and subsidiaries involved in the development of integrated circuits for advanced computing on an “entity list” that requires American companies to receive special permission before they can send materials to them.

In a note to clients last week, Julian Evans-Pritchard, head of China economics at research firm Capital Economics, said the effects of the controls would become more evident as non-Chinese companies launch more advanced versions of its current products and the amount of computing power needed to train AI models increased as its data sets grew.

“The result is that China’s ability to reach the technological frontier in developing large-scale AI models will be hampered by US export controls,” Evans-Pritchard wrote. This could have broader implications for the Chinese economy, she added, as “we believe AI has the potential to be a game-changer for productivity growth over the next two decades.”

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