U.S. Curbs AI Chip Exports To China.

"WASHINGTON -- The Biden administration is tightening restrictions on China's ability to buy advanced semiconductors, fueling friction with U.S. businesses that sell to the vast Chinese market.

The Commerce Department said Tuesday that it would significantly constrict exports of artificial-intelligence chips, making it tougher for U.S. companies Nvidia and Intel to sell existing products in China -- or to introduce new chips to circumvent the rules.

The move aims to close perceived loopholes in export controls announced a year ago.

The goal, Commerce Secretary Gina Raimondo said, is to limit China's "access to advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers." The chips are critical to Chinese military applications, she said, a nod to concerns that the U.S. could fall behind China in key defense technologies.

Shares of Nvidia and other semiconductor stocks dropped Tuesday amid the news. Nvidia was down nearly 6%. Advanced Micro Devices was off nearly 3%, while Intel dropped more than 3%.

The updated rules expand the U.S. government's authority to determine what products U.S. companies can and can't sell in the name of national security. Shipments of high-end AI chips are banned without a license. And "gray zone" chips just below those thresholds will now require notification to the government.

The Semiconductor Industry Association, a U.S. chip-industry group, blasted the rules. "Overly broad, unilateral controls risk harming the U.S. semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere," the group said.

Liu Pengyu, spokesman for the Chinese embassy in Washington, said China firmly opposes the new restrictions, noting that the U.S. measures violate the principles of market economy and "disrupts and destabilizes" global supply chains.

Nvidia said it didn't expect a meaningful short-term impact because demand is so high in other places. Still, Colette Kress, the company's chief financial officer, said in June that long-term restrictions on China "will result in a permanent loss of opportunities for the U.S. industry to compete."" [1]

1. U.S. News: U.S. Curbs AI Chip Exports To China. Hayashi, Yuka; Fitch, Asa.  Wall Street Journal, Eastern edition; New York, N.Y.. 18 Oct 2023: A.3.