Nvidia and Intel impacted over US regulations on AI chips

The Biden Administration plans to stop AI chip shipments to China, with the new regulations inevitably impacting technology companies like Nvidia and Intel

The United States of America's Biden Administration has announced that it plans to halt AI chip shipments to the People’s Republic of China.

Restrictions on these chips, designed by Nvidia and other technology companies, are part of a range of measures aimed at stopping the country from gaining access to US technologies to strengthen its military.

Described by senior administration officials in a press briefing on Monday evening (16th October 2023), the rules restrict a broader swathe of advanced chips and chip-making tools to a greater number of countries, including blacklisting Chinese chip designers Moore Threads and Biren Technology.

US restrictions set to impact global tech exports

According to CNBC, The imposed restrictions mark a huge shift in US and China’s technology policy. It reports that Beijing has since accused the US of “abusing export controls to suppress Chinese companies.”

Indeed, it appears as though the goal is to curb China’s access to chips that could contribute to AI and computing breakthroughs. Nvidia's A800 and H800 chips in particular will be hit by the new regulations, due to a change in chip parameters aimed at capturing a greater number of chips. Also affected is Gaudi2, an Intel AI chip.

“We comply with all applicable regulations while working to provide products that support thousands of applications across many different industries,” Nvidia said on Tuesday, as reported by The Financial Times. “Given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial results.”

Nvidia has previously said as much as 25% of its data centre chip revenues come from China. The company’s business in particular has risen dramatically in the wake of its new developments, including the company's partnership with ServiceNow to build Generative AI in efforts to transform all aspects of business processes.

The company continues to introduce new generative AI platforms for a wide range of industries, with Huang noting in his speech that “accelerated computing and AI mark a reinvention of computing."

Whilst the rules will exempt most consumer chips used in laptops, smartphones and gaming, some will be subject to licensing and notification requirements by US officials.

Continued clashes with China over AI development

This announcement comes in the wake of the US originally announcing regulations on Chinese exports in August 2023. The proposed order was set to increase regulation in Chinese AI, semiconductor and quantum computing sectors. 

China itself has imposed its own rules and regulations on AI to govern its AI development. The country now appears to be focusing on enabling Chinese start-ups to build their own generative AI applications. In June 2023 in particular, the Beijing Academy of Artificial Intelligence (BAAI) introduced Wu Dao 3.0 as part of a series of open-source LLMs.

US President Biden has suggested that rapid technological progress in these industry sectors posed “significant national security risks” because computers could advance in ways that could help develop weapons and break codes used by spy agencies to protect data.

Inevitably, the impact on these types of regulations on international business relations has been called into question, as other nations have stated that severe restrictions could irreversibly impact their economies.

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