The Biden administration has announced its intentions to cease the export of more advanced artificial intelligence chips, including those developed by Nvidia, to China. This decision is part of a comprehensive strategy to prevent Beijing from accessing state-of-the-art U.S. technologies to bolster its military capabilities.

Biden plans to further restrict China's access to Nvidia chips and expand these restrictions to include more countries

In this illustration picture taken on February 17, 2023, you can see the flags of China and the U.S. displayed on a printed circuit board along with semiconductor chips.

The new rules, outlined by senior administration officials during a press briefing, expand the restrictions on a wider range of advanced chips and chipmaking tools, with the list of affected countries now including Iran and Russia. Additionally, the rules blacklist Chinese chip designers Moore Thread and Biren.

The recently introduced measures are designed to disrupt China’s military progress by tightening regulations that were initially issued in October and are expected to undergo regular updates, at least on an annual basis, as noted by Commerce Department Secretary Gina Raimondo. The primary objective is to restrict China’s access to “advanced semiconductors capable of facilitating advancements in artificial intelligence and complex computing systems crucial for military purposes.” She emphasized that the administration’s intent is not to inflict economic harm on Beijing.

The United States and China have been engaged in a technology dispute for several years, and the comprehensive restrictions unveiled last October exacerbated the already tense relationship between the two global powers.

Nvidia, a leading AI chip designer, developed chips like the A800 and H800 that closely adhered to the prior regulations, allowing them to continue supplying China. AMD, another company affected by the rules, has also indicated its intention to pursue a comparable approach.

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Nvidia’s business has significantly grown since the imposition of last year’s rules because its China-specific chips outperform other alternatives. The company is currently selling nearly all of the chips it can procure, as global demand surpasses supply. However, in the long term, Nvidia could be affected as Chinese chip companies seek to fill any gaps left by U.S. firms.

The new regulations will impact Nvidia’s A800 and H800 chips due to changes in chip parameters aimed at encompassing a broader range of chips. Nonetheless, the rules will exempt most consumer chips used in laptops, smartphones, and gaming. Some will be subject to licensing and notification requirements by U.S. officials.

The previous rules applied a two-pronged test, measuring both a chip’s computing performance and its ability to communicate with other chips, a critical factor in AI supercomputers where thousands of chips work together to process massive data sets. Nvidia and Intel created special chips for the Chinese market, which retained powerful computing capabilities but restricted communication speeds to adhere to the previous rules.

The newly released rules eliminate the communication speed restrictions and focus solely on computing performance. As a result, sales of Nvidia’s A800 and H800 chips for the Chinese market will be halted, according to a senior administration official.

On Tuesday, U.S. officials introduced a new measure to restrict chips that exceed a certain level of “performance density,” a metric focused on how much computing power can be packed into a given amount of silicon.

These rules are designed to prevent companies from trying to bypass restrictions on full chips by using a technology known as “chiplets,” where firms could attempt to assemble small chiplets into a larger chip that would violate the rules. This strategy is seen as a core element of China’s technology strategy to advance its chip industry, and analysts believe Chinese firms could use this approach to circumvent U.S. restrictions.

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The new measures also extend licensing requirements for the export of advanced chips to over 40 additional countries presenting diversion risks to China, as well as those under U.S. arms embargoes. The Biden administration has expanded the list of equipment that cannot be sent to China, and chips are barred from being shipped to subsidiaries of companies located anywhere in the world if their parent firms are headquartered in China, Macau, or other arms embargoed nations. This move aims to prevent chips from being illicitly smuggled into China or remotely accessed by Chinese parent companies. The U.S. officials emphasized that Chinese officials were alerted to the forthcoming rules by National Security Advisor Jake Sullivan, Treasury Secretary Janet Yellen, and Commerce Secretary Gina Raimondo.

Reported by Alexandra Alper, Karen Freifeld, Stephen Nellis, and Max A. Cherney; Edited by Chris Sanders and Jamie Freed.

This content adheres to the principles of Thomson Reuters Trust Standards

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