Need license for China chip sale, AMD told

U.S. officials have told Advanced Micro Devices Inc. that the artificial intelligence chip it tailored for the Chinese market is too powerful to sell without a license from the Commerce Department, throwing up a roadblock for the company as it tries to navigate Washington’s crackdown on exports of advanced technologies.

AMD had hoped to get a green light from the Commerce Department to sell the artificial intelligence processor to Chinese customers because it performs at a lower level than what AMD sells outside of China, according to people familiar with the situation who asked not to be identified because the matter is private. U.S. officials told AMD it must still obtain a license from Commerce’s Bureau of Industry and Security in order to sell it, the people said.

AMD didn’t immediately comment. The Bureau of Industry and Security declined to comment. It’s unclear whether AMD will seek the license.

The U.S. government has been working to limit Chinese access to cutting-edge semiconductors that can develop artificial intelligence models — and the tools used to manufacture those chips — out of fear that China will gain a military edge. President Joe Biden’s administration established an initial set of export controls in 2022 and strengthened them last October to include more technology and curb sales to intermediary nations that might undermine the ban.

The tighter controls restricted the sale of a processor that leading chipmaker Nvidia Corp. had designed specifically for China — in compliance with the initial 2022 version of the export rules. The company has since developed new customized, less-powerful products for the Chinese market to align with the 2023 restrictions, and Commerce Secretary Gina Raimondo has said she is looking into the specifics of those components.

The 2022 U.S. ban prevented Nvidia and AMD from selling their most powerful artificial intelligence chips to China, forcing them to find workarounds. Nvidia immediately responded with a reduced-performance modified model, whereas AMD hasn’t publicly discussed its efforts to develop a new processor for the country.

AMD had less of a foothold in the Chinese artificial intelligence chip industry than Nvidia, which had a large share of that market before the ban. When the restrictions took effect in 2022, AMD said it didn’t expect to be materially affected by the rules.

But AMD is now going after the artificial intelligence chip market more aggressively. In December, it released a new MI300 lineup that will challenge processors from Nvidia. The China-tailored product has been referred to as MI309, according to the people. It’s not clear which Chinese customer was trying to buy the AMD AI chips. That factor could influence whether the company is able to secure a license should the chipmaker choose to move forward.

Leading Chinese tech firms, including Tencent Holdings Ltd. and Baidu Inc., have said they have stockpiled enough powerful chips from Nvidia — the types that are now subject to U.S. controls — to advance their chatbots’ capabilities for another year or two.