US Further Tightens AI Chip Export Restrictions to China

U.S. chipmaking giants including Nvidia and AMD are being hit by further restrictions on exports of AI chips to China by the Biden administration.

The U.S. Bureau of Industry and Security, which resides in the Department of Commerce, announced additional rules to the ones put in place last October. The new rules expand licensing requirements for exporters of AI chips to prevent high-performance chips from being sent to China, companies incorporated in Macau and other nations thought likely to resell chips to China. The U.S. cited national security concerns as its reason for imposing the additional curbs.

The latest rules also put in place expanded due diligence requirements. In addition, two Chinese AI chip companies — Shanghai Biren Intelligent Technology Co. and Moore Threads Intelligent Technology Beijing Co. – and their subsidiaries have been added to a list of companies restricted from trade.

Nvidia barred from exporting China-specific chips

The expansion of the Biden administration's rules hit chipmakers, with the shares of Nvidia, AMD and Intel all falling.

But the company that could be hit the hardest over time is Nvidia. Under the new rules, it would not be able to export versions of its flagship chips specifically designed for the Chinese market. Nvidia created the A800 and H800, slower versions of its A100 and H100 chips GPUs, to comply with initial rules unveiled last fall.

Related:It’s Official: Biden to Restrict AI Chip Exports to China

However, the newly introduced rules would look to close loopholes that would allow Chinese entities from accessing even these slower GPUs.

Chinese customers have been stockpiling the 800-series chips in anticipation of such rules and expediting sales, according to Bloomberg Intelligence analyst Kunjan Sobhani.

The heightened restrictions come as Nvidia, like other chipmakers, witnessed a huge demand for chips amid the ongoing generative AI wave. Research from Omdia found that in Q2 alone, Nvidia shipped 900 tons of its flagship H100 chips.

CEO Jensen Huang said earlier this year that the Biden administration’s rules left Nvidia with its “hands tied behind our back” and that further restrictions could harm American chipmakers.

However, in response to the new rules, Nvidia told FT that the company does not expect a near-term meaningful impact on its financial results since there is global demand for its chips.