US announces ban on advanced AI chips sales to China

US Commerce Department on Tuesday announced a ban on exporting advanced artificial intelligence (AI) chips to China. Previous reports revealed such forthcoming for weeks and soon, US Commerce will soon put them into effect.

The US Commerce Department Chief, Gina Raimondo said that she is looking to seize the loopholes in the past export rules. Thus clamping down the entire access of advanced AI chips to China and other banned markets.

Subsequently, stocks of Nvidia closed down about 5% while Broadcom and Marvell slipped about 2% and 1%, respectively. Shares of AMD fell more than 1% and Intel closed down about 1.4%.

After the ban on Nvidia H100, Chinese companies started buying a replacement option for their AI experiments. These are Nvidia H800 and A800 chips that comply with US restrictions. But the new ban also aims these workarounds, confirms the commerce department.

Not only Nvidia but the restrictions could eventually make way for other chip makers including Intel and AMD. Other than these, semiconductor equipment manufacturers are also on the radar of US Commerce due to strict export rules.

However, the latest curbs will cut off a large customer market for AI chipmakers that may take growth momentum from these companies. Speaking of which, Nvidia is the first to file a response to this new US Commerce Department decision.

The most valuable AI chip and graphics card maker said that the company is aligned with the new regulations. An Nvidia spokesperson said, “Given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial results.”

Nvidia revealed that the new restrictions applied on A100, A800, H100, H800, L40, L40S, and RTX 4090 chips. Also, it will impact the entire chip series of – DGX and HGX systems. The export rules will also hurt its ability to complete new products, says the company.

Raimondo mentioned that the goal of these restrictions is to prevent China’s access to advanced semiconductors that could allow AI innovation in the Chinese military.

“The updates are specifically designed to control access to computing power, which will significantly slow the PRC’s development of the next-generation frontier model, and could be leveraged in ways that threaten the U.S. and our allies, especially because they could be used for military uses and modernization,” Raimondo said.

Next up, the US could also ban the export of data center chips, if these also exceed a performance threshold. Companies that want to export AI chips to China or other restricted countries must inform the U.S. Commerce before shipments.

(source)