Biden Admin Adds Rules to Keep American AI Chips Out of China

The Biden administration laid out new restrictions on Tuesday to limit the primary and secondary sale of United States-made chips to China, according to a CNBC report. The move is an effort to limit the nation’s technological and military progress.

The new ban restricts the sale of Nvidia’s A800 and H800 chips to Chinese companies, expanding upon restrictions imposed last year by the Biden administration to limit China’s access to American chips. Previous restrictions banned the sale of Nvidia H100 chips and implemented sweeping regulations to limit China’s progress on advanced generative AI models.

Nvidia’s stock dipped more than 7% at market open Tuesday off of this news. AMD and Intel’s products are also impacted by the regulation, alongside Chinese companies that could be relying on American chips to build large language models such as ByteDance or Baidu.

“We comply with all applicable regulations while working to provide products that support thousands of applications across many different industries,” an Nvidia spokesperson told Gizmodo. “Given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial results.”

To prevent the sale of chips to China through third parties, the US also plans to force chipmakers to obtain licenses to ship to dozens of other countries that are subject to US embargoes, according to the New York Times. Reports surfaced last week on the Biden administration’s intention to close these very loopholes.

“The updates are specifically designed to control access to computing power, which will significantly slow the PRC’s development of next-generation frontier model, and could be leveraged in ways that threaten the U.S. and our allies, especially because they could be used for military uses and modernization,” said U.S. Commerce Secretary Gina Raimondo Tuesday on a call with CNBC reporters.

Biden’s new restrictions further escalate the chip war between the United States and China, forcing the two world powers to develop their own competing chip manufacturers and artificial intelligence systems.

The one exception to the chip war continues to be the semiconductor manufacturer TSMC, which received a waiver from the United States last week to continue investments in chip-building equipment for its China facilities. The Taiwanese company straddles the chip war and is also building an Arizona fabrication plant receiving CHIPS act funding.