US media: Tightening chip controls in China will hurt US companies

The New York Times website published an article on October 17 titled "The United States Tightens China's Access to Advanced Artificial Intelligence Chips," written by Anna Swanson. The full text is excerpted as follows:

The Biden administration announced on the 17th additional restrictions on the sales of advanced semiconductors by US companies, strengthening the restrictive measures issued in October last year to limit China's progress in the fields of supercomputing and artificial intelligence.

These regulations are clearly likely to prevent the export of most advanced semiconductors from the United States to data centers in China, which use them to develop models with artificial intelligence capabilities.

The Biden administration believes giving China access to such advanced technology is dangerous because it could help strengthen the country's military.

But industry analysts say artificial intelligence also has valuable commercial applications, and increased restrictions may affect Chinese companies that have been working hard to develop artificial intelligence chatbots. In the longer term, these restrictions may also affect the Chinese economy, given that artificial intelligence is transforming industries from retail to health care.

These restrictions are obviously also likely to affect sales to China of U.S. chipmakers such as Nvidia, Advanced Micro Devices and Intel. Some chipmakers, which derive as much as a third of their revenue from the Chinese market, have been lobbying against tighter restrictions in recent months.

U.S. officials said the rules do not target chips intended purely for commercial applications such as smartphones, laptops, electric vehicles and gaming systems. Most regulations will take effect within 30 days, but some will take effect earlier.

The Semiconductor Industry Association, which represents major chipmakers, said in a statement that it was assessing the impact of the new rules.

The organization said: "We recognize the need to protect national security and believe that maintaining the health of the U.S. semiconductor industry is an important part of achieving this goal. Overly broad unilateral controls have the potential to harm the U.S. semiconductor ecosystem, but do not Promotes national security as it encourages overseas customers to look elsewhere."

A spokesman for Nvidia said that given the global demand for Nvidia products, the company complies with all applicable regulations and does not expect a significant impact on its financial results in the near term.

U.S. Commerce Secretary Gina Raimondo said adjustments have been made "to ensure these rules are as effective as possible" and she expects they will be updated at least annually as technology evolves. She added: "Controlling technology is more important than ever as it relates to national security."

China is increasingly mastering many cutting-edge technologies, and the Biden administration is trying to counter that by pumping money into new U.S. chip factories. At the same time, it has sought to place strict but narrow restrictions on exports of technology to China that may have military applications, while allowing other trade to flow freely. U.S. officials describe this strategy as protecting U.S. technology with “small courtyards and high walls.”

But determining which technologies actually pose a threat to national security is a contentious task. Large semiconductor companies believe that too strict a trade ban could reduce the funds they need to invest in new factories and research facilities in the United States.

Some critics say the restrictions could also boost China's efforts to develop alternative technologies, ultimately undermining U.S. influence around the world. Chinese researchers have made significant progress in developing advanced domestic chips, but experts say China still falls short of Western capabilities.

The changes announced today clearly have a particularly significant impact on Nvidia, the biggest beneficiary of the AI ​​boom.

Nvidia said it typically gets 20% to 25% of its data center revenue from China, including artificial intelligence chips and other products. Analysts say the company may be able to recoup those losses by selling to other markets as global demand for Nvidia chips for artificial intelligence increases. However, the company's shares fell about 5% today amid concerns about the impact of the new performance limitations on a wider range of Nvidia chips.

Washington also said it would create a new "grey list" that would require manufacturers of certain less sophisticated chips to notify the government before selling them to China, Iran or other countries subject to U.S. arms embargoes.