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AI Wars: US Plans to Restrict Chip Exports to China

2 mins
Updated by Geraint Price
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In Brief

  • US plans to restrict AI chip exports to China due to concerns about AI-powered weaponry development.
  • New rules may require chipmakers to obtain a license for exporting AI chips, primarily to China.
  • Alongside AI chip restrictions, the US also aims to limit cloud services to Chinese AI companies.
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The US wants to restrict the exports of artificial intelligence (AI) chips to its rival China due to concerns about AI-powered weapons.

AI has the potential to reshape nations and give them an edge against their rivals. It can upscale healthcare, education, the environment, and even the military.

US AI Chips Will Require License

According to the Wall Street Journal’s sources, the Biden government would make it mandatory for chipmakers to obtain a license for exporting AI chips to other countries, specifically China. The new rule might come into action from the next month, likely after the visit of Treasury Secretary Janet Yellen to China.

The move comes as the government is concerned about the rivals utilizing the technology for hacking and developing weapons. The US has already imposed restrictions on AI chips since October 2022.

However, the new rules would add more to the October restrictions.

Due to last year’s restrictions, Nvidia could not export its A100 chips. Hence, the company made slightly less powerful A800 chips for the Chinese market. But the new rules might also restrict the sale of A800 chips.

Along with the restrictions on AI chips, the US also wants to limit cloud services to China’s AI companies. Companies often use cloud services to reduce reliance on Graphic Processing Units (GPUs).

Impact of New Rules on Nvidia

Due to the AI boom, Nvidia became the first chipmaker to reach a $1 trillion market cap and became the first chipmaker to achieve the milestone. But many speculate that such restrictions might impact its financial results. 

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However, the Chief Financial Officer of Nvidia, Colette Kress, believes that stricter rules would not immediately impact the balance sheet. She said:

“We do not anticipate that such additional restrictions, if adopted, would have an immediate material impact on our financial results.”

But, Kress argues that US’s restrictions on AI chips would result in the permanent loss of opportunities for the US industry. He spoke at an investors’ conference:

“Over the long-term, restrictions prohibiting the sale of our data center GPUs to China would result in a permanent loss of opportunities for U.S. industry to compete and lead in one of the world’s largest markets and impact on our future business.”

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Harsh Notariya
Harsh Notariya is a journalist at BeInCrypto, who writes about various topics, including decentralized physical infrastructure networks (DePIN), tokenization, crypto airdrops, decentralized finance (DeFi), meme coins, and altcoins. Before joining BeInCrypto, he was a community consultant at Totality Corp, specializing in the metaverse and non-fungible tokens (NFTs). Additionally, Harsh was a blockchain content writer and researcher at Financial Funda, where he created educational reports on...
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