The Biden administration’s recent rules to restrict China’s access to critical U.S. artificial intelligence (AI) chips include a potential lifeline for tech giants Nvidia, Intel, and Advanced Micro Devices (AMD) to continue doing business in one of the world’s largest chip markets. Buried within the extensive 400-page rule document, officials from the U.S. Bureau of Industry and Security (BIS) indicated their willingness to collaborate with the semiconductor industry to find ways to continue supplying AI chips to China for small and medium-sized systems.
The primary objective of these rules is to limit China’s ability to leverage American chips in constructing massive supercomputers with both civilian and military applications, potentially similar to OpenAI’s ChatGPT.
Thomas Krueger, a former U.S. National Security Council export control official, explained that the rules are focused on preventing Chinese military systems from accessing specific capabilities while not targeting broader consumer applications.
U.S. officials have sought input on creating “tamperproof” methods to prevent the aggregation of up to 256 AI chips into supercomputers. This approach aims to control the use of AI chips, limiting them to smaller-scale AI training while avoiding large-scale applications of concern.
Nvidia, Intel, and AMD have refrained from commenting on these developments. Nvidia’s shares dropped by 4.67% after the announcement of the new rules.
Another aspect of these rules that benefits Nvidia, Intel, and AMD is the restriction placed on their most capable Chinese competitors. The regulations make it nearly impossible for well-funded Chinese startups like Moore Threads and Biren, founded by Nvidia veterans, to manufacture designs using cutting-edge chipmaking technology. This limitation positions Nvidia, Intel, and AMD as potential primary suppliers for Chinese buyers.
As part of the new rules, U.S. officials also targeted Chinese chip manufacturers by restricting the export of advanced chipmaking equipment known as immersion deep ultraviolet (DUV) lithography machines if they contain any American components. These machines, produced by Japan’s Nikon and the Netherlands’ ASML, are crucial for semiconductor manufacturing.
The rules effectively aim to close potential avenues for China to advance its semiconductor industry. They restrict certain technologies and techniques found in complex machines needed to create advanced transistors. While these rules limit China’s ability to expand advanced semiconductor manufacturing, they also allow toolmakers to sell equipment designed for older chip technologies without violating government restrictions.