[News] Rumored U.S. Tightens Export Ban on Chips to China, Affecting Chinese Chip Design Firms

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Reports indicate that the United States is poised to unveil an updated set of restrictions on chip exports to China this week. Beyond the previously reported tightening measures on AI chips and equipment exports, these new regulations are expected to restrict the supply to chip design companies. The aim is to enhance control over the sale of graphic chips and advanced chip manufacturing equipment for AI applications to Chinese enterprises, with the possibility of adding Chinese chip design companies to the list of restricted entities.

As reported from Reuters and Bloomberg, U.S. authorities will demand that overseas manufacturers obtain licenses to fulfill orders from these companies and subject Chinese firms attempting to circumvent restrictions by using third-party countries for shipping to additional inspections. While the new regulations are expected to be announced this week, the potential for delays should not be ruled out.

In October 2022, the United States declared export restrictions on advanced semiconductor processes and chip manufacturing equipment bound for China, as a measure to prevent the development of cutting-edge technology that could potentially bolster military capabilities for geopolitical adversaries.

Following the implementation of these export bans, U.S. tech companies, such as Nvidia and Applied Materials, incurred significant losses in orders. For example, Nvidia was unable to sell its two most advanced AI chips to Chinese companies, leading to the introduction of a “downgraded” chip, the H800, designed specifically for the Chinese market to bypass existing regulations.

U.S. officials have revealed plans to introduce new guidelines for AI chips, including the restriction of certain advanced data center AI chips that currently do not fall under any limitations. They are considering the removal of “bandwidth parameters” to prevent the entry of AI chips perceived as too powerful into China.

However, they plan to introduce expanded guidelines for chip control, which may reduce communication speeds among AI chips. Slower communication could increase the complexity and cost of AI development, particularly when many chips need to be connected for training large AI models. Additionally, the U.S. will introduce “performance density parameters” to guard against potential future workarounds by companies.

Reports suggest that the United States is looking to prohibit the export of Nvidia’s H800 chip, a “downgraded” chip designed for the Chinese market to legally bypass existing regulations.

The Biden administration is also preparing for additional scrutiny of Chinese companies attempting to modify shipping and manufacturing locations in a bid to evade specific country restrictions. This rule will continue to limit sales of specific chips to Chinese companies through overseas subsidiaries and related entities, requiring authorization before exporting restricted technology to countries that could serve as intermediaries.

Furthermore, the progress in Huawei’s new smartphones has prompted the U.S. authorities to tighten control further, initiating investigations for actions against Huawei or SMIC that will be carried out independently of the new export control regulations.

In response to the anticipated expansion of U.S. export controls on Chinese companies, Chinese Foreign Ministry Spokesperson Mao Ning stated, “We have made our position clear on US restrictions of chip exports to China. The US needs to stop politicizing and weaponizing trade and tech issues and stop destabilizing global industrial and supply chains. We will closely follow the developments and firmly safeguard our rights and interests.”

(Image: Nvidia)