US restricts sales of AI Chips to China

The US government has notified chipmakers Nvidia Corp and Advanced Micro Devices (AMD) to halt the export of AI chips for related applications to Russia and China. The notification is being seen as a part of Washington DC’s tech crackdown on Beijing. 

Chinese officials have unequivocally opposed this regulation and accused the US of deviating from the principle of fair competition. They believe that this move is in violation of the international economic and trade agreements. 

In response to the rule, the Beijing government expressed disappointment and demanded that, "The US side should immediately stop its wrongdoing, treat companies from all over the world including Chinese companies fairly, and do more things that are conducive to the stability of the world economy." 

The US Commerce Department said that it is ‘not in a position to outline specific policy changes at this time’. 

A spokesperson from the department confirmed the statement and further emphasised—"We are taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and end-users to protect US national security and foreign policy interests."

He also said that this approach would include proactively preventing the acquisition and use of US technology in the context of China’s ‘military–civil fusion programme’ that fuels the modernisation efforts for the Chinese military, which—in a domino effect—are likely to result in increased human rights abuses and other malign activities. 

Nvidia recently addressed the new rule and said that the company was notified by the US government with details of the new licensing requirements. They further added that this new regulation affected the sales of Nvidia’s advanced line of server GPUs to Russia or China. AMD also confirmed to have received the notification regarding the GPUs that are suited for AI-related computing. 

Following this directive, Nvidia shares fell by 11 per cent on Thursday. The chip manufacturer said that restrictions on the exports of its two top computing chips H100 and A100 to China could hurt its business, affecting an estimated $400 million worth in quarterly sales. 

Nvidia reported a revenue of $6.7 billion in the second quarter of FY22, noting values significantly lower than initial forecasts.