US Escalates Tech War: Cuts China’s Access to AI Chips!


The Biden administration is tightening restrictions on the export of semiconductors to China, a move designed to narrow the types of chips American companies can sell to the country and address perceived loopholes in regulations introduced in October 2022. The updated rules, announced by the U.S. Commerce Department, aim to enhance controls and reduce avenues for evading restrictions. Among the affected products are advanced artificial intelligence chips like Nvidia’s H800 and A800 offerings, as stated in a regulatory filing by the U.S. tech company.

In addition to mainland China and Macao, the new regulations also expand export curbs to include 21 other countries subject to U.S. arms embargoes, including nations like Iran and Russia. These measures, which have already impacted the shares of major American chipmakers, are scheduled to take effect in 30 days.

The initial rules were introduced to impede China’s ability to acquire advanced computing chips and manufacture sophisticated weapons systems. However, due to rapid technological advancements, senior officials in the Biden administration recognized the need for adjustments.


Commerce Secretary Gina Raimondo, who visited China in August, emphasized the administration’s focused intent on slowing China’s military advancements. She highlighted that Washington deliberately refrained from imposing further restrictions on chips for consumer applications like phones, video games, and electric vehicles.

Despite these reassurances, Beijing is unlikely to be placated. China has expressed a steadfast determination to secure leadership in core technologies, positioning itself as a global tech powerhouse. The Foreign Ministry of China criticized the new U.S. rules, urging the U.S. to refrain from politicizing trade and tech issues.

As part of ongoing communication efforts with their Chinese counterparts, U.S. officials informed Beijing of the impending updates. However, it’s important to note that there was no negotiation with China on these rules.

The escalating technological rivalry between the world’s two largest economies is evident in recent moves. The U.S. has rallied its allies in Europe and Asia to restrict the sale of advanced chipmaking equipment to China. In response, Beijing imposed its own restrictions on the export of essential elements like germanium and gallium, crucial for semiconductor production.

The announcement of the new export controls led to a decline in the stock prices of major U.S. chipmakers. Nvidia’s shares dropped by 4.7%, while Intel and AMD experienced declines of 1.4% and 1.2%, respectively. Nvidia revealed that the rules would impose new licensing requirements for exports to China and other markets, such as Saudi Arabia, the United Arab Emirates, and Vietnam. The company also stated that its A800 chip, reportedly designed for Chinese customers to bypass last year’s restrictions, would be among the affected components.

The broader U.S. chipmaking industry is closely examining the implications of these new rules. The Semiconductor Industry Association stressed the importance of protecting national security but also cautioned against overly broad controls that could potentially harm the U.S. semiconductor ecosystem. The association, representing 99% of the U.S. chip sector, urged the administration to collaborate with allies to ensure a level playing field for all companies.

The impact of these measures is also being assessed in Europe. Dutch chipmaking equipment manufacturer ASML stated that it is evaluating the implications of the rules, anticipating no significant financial impact in 2023. However, during a call about the company’s third-quarter results, ASML’s CEO Peter Wennink noted that the updated export restrictions would affect between 10% and 15% of the firm’s sales to China.

Additionally, the U.S. Department of Commerce added 13 Chinese entities to a list of firms with which U.S. companies may not do business for national security reasons. Among these are two Chinese startups, Biren Technology and Moore Thread Intelligent Technology, and their subsidiaries. The department alleges that these companies are involved in the development of advanced computing chips that pose a risk to U.S. national security.