New rules curb chip sales to China
U.S. also restricts exports to 2 AI chip firms seen as Nvidia rivals
The Biden administration stepped up its efforts to block China’s access to advanced semiconductor technology with a slew of new rules, including curbs on the sale of Nvidia Corp. chips designed specifically for the Chinese market.
The latest regulations also restrict exports to two Chinese artificial intelligence chip firms that are seen as rivals to U.S.-based Nvidia. The rules — aimed at preventing China from accessing cutting-edge technology with military uses — cast a cloud over U.S. chip stocks on Tuesday.
Nvidia fell as much as 7.8%, its biggest intraday decline since December. The stock had more than tripled this year before the pullback, fueled by the artificial intelligence boom. The company makes the most popular artificial intelligence accelerators, processors that help sophisticated algorithms handle large amounts of data.
The tighter controls will target Nvidia’s A800 and H800 chips, a senior U.S. official said, which the American firm created for export to China — the world’s largest market for chips — after the Biden administration introduced its initial restrictions last October.
“We comply with all applicable regulations while working to provide products that support thousands of applications across many different industries,” an Nvidia spokesperson said in an emailed statement. “Given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial results.”
The Biden administration also added two Chinese artificial intelligence chip startups — Shanghai Biren Intelligent Technology Co. and Moore Threads Intelligent Technology Beijing Co. — and their subsidiaries to a trade restriction list that mandates companies to obtain a U.S. government license before shipping to those firms.
Biren said that it is strongly opposed to the ruling and has urged the Commerce Department to review its decision. Chinese Foreign Ministry spokesperson Mao Ning said Monday at a regular news briefing in Beijing that her nation opposed “the U.S. politicizing, instrumentalizing and weaponizing trade and tech issues.”
The new rules also require companies to notify the U.S. government before selling chips that fall below the controlled threshold. Top-of-the-line chips are best for powering artificial intelligence models, a senior administration official said. But with a lot of money and a little jury-rigging, a whole class of slightly inferior chips could also be used for artificial intelligence and supercomputing and therefore pose a national security risk, the official said.
The U.S. wants to monitor that so-called gray zone activity, the official added, while declining to comment on the specific parameters of which chips will be affected. The administration will review company notifications within 25 days, the official said, to determine whether firms need a license to sell those chips to China.
“It’s difficult to draw a bright line between military and commercial technology,” U.S. Commerce Secretary Gina Raimondo told reporters ahead of publication of the rule. “There are often dual-use technologies — and the same technologies that fuel commercial exchange, unfortunately, sometimes can also allow our competitors to modernize their military, surveil their citizens and solidify oppression.”
But the U.S. does not want to be more restrictive than necessary, Raimondo said, emphasizing a consistent message from the Biden administration that Washington does not seek to hurt China’s economy.