US saves Nvidia, stifles China’s chipmaking future.
By Stephen Nellis and Max A. Cherney
October 18, 2023 – 7:09 AM UTC
SAN FRANCISCO (Reuters) – The Biden administration’s new rules, aimed at restricting China’s access to U.S. artificial intelligence chips, have also provided a potential lifeline for Nvidia, Intel, and AMD to maintain their lucrative business in the Chinese chip market.
Buried within the extensive rules issued by the U.S. Bureau of Industry and Security (BIS), officials have expressed openness to input from the semiconductor industry on how to continue supplying AI chips to China for small and medium-sized systems.
The primary objective of these rules is to prevent China from utilizing American chips to develop supercomputers with military applications, similar to OpenAI’s ChatGPT technology.
Thomas Krueger, a former U.S. National Security Council export control official, explained that the rules are specifically focused on capabilities that could enhance Chinese military systems, rather than targeting broad consumer applications.
The BIS has requested suggestions for creating a “tamperproof” method to prevent the combination of up to 256 AI chips into a supercomputer.
“This approach could limit the use of controlled AI chips for training large dual-use AI models with concerning capabilities, while still allowing AI training at a smaller scale,” stated the BIS.
Nvidia, Intel, and AMD declined to comment on the new rules, but Nvidia’s shares experienced a 4.67% decline following the announcement.
Furthermore, the rules also hinder the progress of Nvidia veterans’ Chinese competitors, Moore Threads and Biren, making it nearly impossible for them to manufacture cutting-edge chips.
As a result, whatever Nvidia is able to sell to China will likely be the best legal option for Chinese buyers.
Regarding the new rules, analysts at investment bank Piper Sandler expressed the belief that Nvidia will quickly adapt and redesign a chip to meet the new standards with minimal disruptions to their current business outlook.
TOOL RULES TIGHTENED
Among the new rules, which will take effect in 30 days, U.S. officials have specifically targeted China’s chip manufacturers by restricting the export of advanced chipmaking equipment known as immersion deep ultraviolet (DUV) lithography machines if they contain any American parts.
TechInsights analyst Dan Hutcheson explained that these rules effectively close off a significant portion of potential future developments, aiming to “future-proof the document.”
Although the DUV machines are not produced by American toolmakers, they are manufactured by Japan’s Nikon and the Netherlands’ ASML.
The DUV rules announced on Tuesday formalize the collaboration between the U.S., Japan, and the Netherlands to impose similar controls on exporting these machines to China, according to trade and policy attorney Clete Willems.
While immersion DUV machines may not produce cutting-edge chips, they come close and are likely used by Huawei’s chip manufacturing partners to create new smartphone chips, as per analysts.
Gregory Allen, a director at the Center for Strategic and International Studies, believes that this control alone will significantly limit China’s ability to expand advanced node semiconductor manufacturing for many years.
By narrowing the scope of blocked equipment, the rules allow toolmakers to sell equipment designed for building older chips without violating government restrictions.
Reporting by Stephen Nellis and Max A. Cherney in San Francisco; Editing by Kenneth Li and Jamie Freed
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How do the tightened tool rules imposed by the US impact China’s chip manufacturers, and what potential collaboration opportunities are there with global allies
Title: New US Rules on AI Chips Offer Opportunity for Nvidia, Intel, and AMD to Maintain Presence in Chinese Market
Introduction:
The Biden administration’s recently introduced regulations, aimed at curbing China’s access to U.S. artificial intelligence (AI) chips, have inadvertently opened a potential lifeline for major chip manufacturers like Nvidia, Intel, and AMD to sustain their lucrative businesses in the Chinese chip market. While the primary aim of these rules is to prevent China from utilizing American chips in the development of military-grade supercomputers, they also provide a window for dialogue between the semiconductor industry and the U.S. Bureau of Industry and Security (BIS) to explore ways to continue supplying AI chips to China for smaller systems. This article delves into the details and implications of these new regulations.
Background:
The set of regulations issued by the BIS has prompted industry players to provide input on how to navigate the challenges of supplying AI chips to China without compromising national security interests. The rules aim to prevent the utilization of American chips for the development of Chinese military systems, particularly those with capabilities similar to OpenAI’s ChatGPT technology. According to Thomas Krueger, a former U.S. National Security Council export control official, the regulations are focused on capabilities that could potentially enhance Chinese military systems, rather than targeting broad consumer applications.
Tamperproof Method and Restricted AI Chip Usage:
The BIS has specifically requested suggestions for developing a “tamperproof” approach that prevents the combination of up to 256 AI chips into a supercomputer. This approach aims to limit the use of controlled AI chips for training large dual-use AI models with concerning capabilities while still allowing AI training at a smaller scale. Nvidia, Intel, and AMD have refrained from commenting on the new rules, although Nvidia saw a decline of 4.67% in its share value following the announcement.
Impact on Competitors and Opportunities for Nvidia:
In addition to affecting major chip manufacturers, the rules also impede the progress of Nvidia’s Chinese competitors, Moore Threads and Biren, making it nearly impossible for them to manufacture cutting-edge chips. Consequently, Nvidia is poised to become the best legal option for Chinese buyers. Analysts from investment bank Piper Sandler believe that Nvidia will quickly adapt and redesign chips to meet the new standards, minimizing disruptions to their current business outlook.
Tightened Tool Rules and Collaboration with Global Allies:
Among the new rules, U.S. officials have targeted China’s chip manufacturers by imposing restrictions on the export of advanced chipmaking equipment known as immersion deep ultraviolet (DUV) lithography machines if they contain any American parts. While these machines are not manufactured by American toolmakers, they are produced by
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