The U.S. is reportedly preparing to tighten export regulations to China regarding semiconductors that are needed for data centers powering artificial intelligence capabilities. Concerns about narrowed AI technology gap between the world’s two largest economies are suspected as the main reason for the Biden administration setting up strengthened restrictions.
Reports stated the U.S. Department of Commerce is upholding higher standards for permitting AI chip exports to China and other countries in concern, with implementation suspected to take place as early as next month. Authorities are expected to argue China has been using high-end chips for weapons development and various hacking attempts that could threaten U.S. national security.
It’ll mark the U.S. government’s latest attempts to inhibit sales of high-end chips from Nvidia and AMD supplying graphics processing unit(GPU) semiconductors to Chinese AI developers. GPU plays the role of the brain in generative AI. Currently, Nvidia dominates the global GPU market for AI with a staggering 90% or more market share.
Last October, Nvidia had to halt exports of its widely known GPU products, ‘the A100’ and its improved version the ‘H100’ to China, following the Commerce Department’s plans to curb chip exports to the country. At the time, Nvidia had introduced separate versions to circumvent the export ban by slowing down the data transmission speed for the ‘A800’ and ‘H800’ models to be shipped to China.
This time the toughened measure from the Commerce Department is expected to include a ban on shipments of the slower GPU versions. This follows a series of the Biden administration’s clampdown on Chinese tech following reports of new regulations to restrict Chinese cloud companies from operating in the U.S.
In response, Nvidia’s Chief Financial Officer Colette Kress on Wednesday said the company opposed the U.S. government’s move saying the restrictions “would result in a permanent loss of opportunities for the U.S. industry” by alienating the Chinese market, which currently generates a large portion of U.S. chipmakers’ revenue.
Meanwhile, the byproduct of the digital tech war between the two biggest economies is an increase in illegal sales of GPUs which have become a lucrative business in China. Thousands of intermediaries in China are feeding off of soaring demand for GPUs as local tech giants Alibaba and Baidu jumped into the development to create their own versions of generative AI.