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US Planning Reinforcements On AI Chip Exports To China: Report

Nvidia would be particularly affected by any tightening of the rules.

US officials are contemplating the reinforcement of an export control regulation aimed at restricting the flow of artificial intelligence (AI) chips to China, reported Reuters based on source inputs. The proposed measure would involve imposing limits on the computing power of such chips. This development follows the Biden administration's issuance of comprehensive rules in October of last year, which aimed to stifle China's semiconductor industry while the US bolstered its own chip sector through substantial subsidies.

The sources indicate that an update to these rules may be introduced by late July, although one source cautioned that US actions involving China often experience delays. The US Department of Commerce declined to comment on the matter, as per Reuters.

Recently, Nvidia's Chief Financial Officer, Colette Kress, expressed concerns regarding potential restrictions on the sale of their data centre graphics processing units (GPUs) to China. Kress warned that such restrictions, if implemented, would result in long-term consequences for the US industry's ability to compete and thrive in one of the world's largest markets, impacting Nvidia's future business and financial performance.

The Wall Street Journal reported earlier this week that the Biden administration was considering imposing new limitations on the export of AI chips to China.

One of the October regulations limited the sale of chips in China that possess the necessary computing power to develop AI technologies akin to ChatGPT. This restriction immediately affected sales of products from Nvidia and Advanced Micro Devices (AMD) and is expected to impact future offerings from Intel as well.

Nvidia would be particularly affected by any tightening of the rules, as the company's strong presence in the AI chip market contributed to its valuation reaching $1 trillion earlier this year. However, Kress stated that she did not anticipate any immediate material impact on Nvidia's financial results if additional restrictions were implemented.

Doubts have been raised regarding the efficacy of the October rule in curbing the development of AI systems by Chinese companies. Reuters reported last month that major Chinese firms, including Tencent Holdings, plan to utilise Nvidia's export-compliant chips to significantly reduce the time required to train large-scale AI systems.

The existing regulation concerning AI chips encompasses two key restrictions. One pertains to the intercommunication speed between chips, which is crucial for AI systems like ChatGPT that require the chaining together of thousands of chips. The other limitation relates to the computing power of the chips.

For instance, Nvidia's H800 chip designed for the Chinese market offers comparable computing power to their global chip at certain settings used in AI work, but its chip-to-chip speeds are restricted, as per a specification sheet reviewed by Reuters.

Intel and AMD declined to comment on the matter. Previously, AMD stated that the rules would not impact its financial outcomes.

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