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According to analysts, the new shipping limitations could cripple Beijing’s AI ambitions and reduce revenue for U. S. chipmakers.
By Ana Swanson
Biden’s leadership on Tuesday announced new restrictions on the amount of complex semiconductors U. S. corporations can sell to China, tightening restrictions issued last October to restrict China’s progress in supercomputing and synthetic intelligence.
The regulations most likely halt shipments of complex semiconductors from the U. S. to Chinese knowledge centers, which use them to produce models capable of developing synthetic intelligence. More U. S. corporations that sell complex chips to China, or the machinery used to make them, will have to notify the government of their plans or download a special license.
Faced with the threat of complex U. S. chips being shipped to China through third countries, the U. S. will also require chipmakers to download licenses to ship them to dozens of other countries under U. S. arms embargoes.
Biden’s leadership argues that China’s arrival in such a complex generation is dangerous, as it can simply help the country’s military with responsibilities such as guiding hypersonic missiles, setting up complex surveillance systems, or cracking top-secret U. S. codes.
Leading AI experts have warned that the technology, if managed well, can pose existential threats to humanity.
But synthetic intelligence also has valuable business applications, and the tightest restrictions may be only for Chinese corporations looking to expand AI. Chatbots such as ByteDance, TikTok’s parent company, or web giant Baidu, according to industry analysts. weaken the Chinese economy, given that AI transforms industries ranging from retail to healthcare.
Limits also seem very likely for the money that U. S. chipmakers like Nvidia, AMD, and Intel make by selling complex chips in China. Some chipmakers derive up to a third of their profits from Chinese buyers and have spent the past few months lobbying opponents. to tighter restrictions.
U. S. officials said the regulations would exempt the chips only for use in advertising applications, such as smartphones, laptops, electric cars and gaming systems. Most regulations will go into effect in 30 days, some will go into effect sooner.
In a statement, the Semiconductor Industry Association, which represents major chipmakers, said it was assessing the effect of the updated rules.
“We recognize the desire to protect national security and that maintaining a healthy U. S. semiconductor industry is a critical component to achieving this goal,” the organization said. “Overly broad and one-sided controls threaten to damage the U. S. semiconductor ecosystem. “They are not promoting national security by inspiring foreign consumers to look the other way. “
On a call with reporters on Monday, a senior management official said the U. S. has noticed that other people are looking to circumvent past regulations and that recent advances in generative AI have made it possible to circumvent past regulations. Large language models were developed and used to underpin it.
Commerce Secretary Gina M. Raimondo said the adjustments were made “to ensure that those regulations are as effective as possible” and that she expects the regulations to be updated at least once a year as the generation progresses.
Referring to the People’s Republic of China, he said: “The purpose is the same as it has always been, which is to constrain the efforts of the People’s Republic of China. Access to complex semiconductors that can force advances in synthetic intelligence and complicated computers that are imperative. “they have to the military applications of the People’s Republic of China.
He added: “Generation control is more than ever when it comes to national security. “
Stricter regulations may simply irritate Chinese officials as the Biden administration tries to improve relations and prepare for an imaginable meeting between President Biden and China’s most sensible leader, Xi Jinping, in California next month.
Biden’s leadership has attempted to counter China’s developing dominance of many complex technologies by pumping cash into new chip factories in the United States. At the same time, it has attempted to impose strict but narrow restrictions on exports to China of technologies that may have military uses, while allowing other industries freely. Officials describe the strategy as a protective American generation with “a small backyard and a top fence. “
But determining which technologies pose a national security risk remains a debatable task. Major semiconductor corporations such as Intel, Qualcomm and Nvidia have argued that overly restrictive industrial bans may simply deprive them of the profits they want to invest in new factories and studios in facilities. the United States.
Some critics argue that such limits may also boost China’s efforts to expand technologies of choice, weakening U. S. influence globally. Chinese researchers have made significant strides in developing domestic versions of complex chips, but experts say the country still lags behind in Western semiconductor production capabilities.
The tweaks announced Tuesday appear to have significant implications for Nvidia, the biggest beneficiary of the synthetic intelligence boom.
Reacting to the first major limitations 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 deploy AI. templates. A senior management official said the new regulations would limit sales.
Nvidia said China generates 20 to 25 percent of the company’s technology revenue, which includes products other than AI-enabled chips.
In addition to those expanded restrictions, the U. S. will create a “gray list” that will require brands of some less complex chips to notify the government if they sell them to China, Iran or other countries under U. S. arms embargo.
The directorate has also placed thirteen Chinese corporations and subsidiaries involved in the development of embedded circuits for complex computing on an “entity list” that requires U. S. corporations to obtain special permission before they can ship hardware 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 obvious as non-Chinese corporations launch more complex versions of their existing products and the amount of computing power needed to exercise AI. Models have higher levels as their datasets get older.
“The upshot is that it will most likely increase China’s ability to succeed at the technological frontier in advancing AI on a large scale. Models will be hampered by U. S. export controls,” he said. This may have broader implications for the Chinese economy. He added that since “we AI are effective,” it has the potential to be a game-changer for productivity expansion over the next two decades.
Ana Swanson is founded in the Washington bureau and covers industry and foreign economics for The Times. In the past, he worked at The Washington Post, where he wrote about industry, the Federal Reserve and the economy. Learn more about Ana Swanson
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