On Tuesday, the U.S. Department of Commerce revealed their plan to impede the sale of superior Artificial Intelligence (AI) chips to China. Senior administration officials stated that restrictions will apply to Nvidia's A800 and H800 chips as well as those distributed by Intel and AMD. These rules may obstruct the export of semiconductor manufacturing equipment to China from firms such as Applied Materials, Lam and KLA.
On Tuesday, the U.S. Department of Commerce declared intentions to bar the sale of AI chips with more advanced features to China in the coming weeks. This is an effort to seal off the gaps in the regulations implemented last year that blocked the sale of the Nvidia H100, a processor favored by U.S. AI companies such as OpenAI. Consequently, the stocks of chip businesses wavered in Tuesday morning trading, with Nvidia, Broadcom, Marvell, AMD, and Intel dipping by amounts ranging from 1.5-5%. The A800 version, which was able to clear the U.S. restrictions by downgrading the interconnect speed, will also be included in the restrictions.
Applied Materials, Lam, and KLA may also experience repercussions as their semiconductor manufacturing equipment will possibly be hindered from being sold or exported to China. U.S. Secretary of Commerce, Gina Raimondo, expressed on the call with reporters that the purpose of the new restrictions is to obstruct access to potent semiconductors that could expedite AI developments and be utilized for military uses, but not to interfere with Chinese economic development. Nvidia, however, noted in August that the actions could negatively affect earnings if extended to the long term.
The U.S. rules will institute a performance threshold to oversee the export of data center chips, and will apply to chips that exceed a performance density benchmark calculated in flops per square millimeter. If companies wish to export AI chips to China or other prohibited regions, they will have to alert the U.S. Commerce Department. But chips for consumer products such as game consoles or smartphones are excluded, albeit, companies may have to disclose information regarding their orders if the chips are sufficiently fast. The U.S. Department of Commerce will also expand the list of materials subjected to U.S. restrictions, and is aiming to prevent any circumvention of the regulations by blocking off the channel of shipping chips into China through foreign subsidiaries. Secretary Raimondo noted that the new restrictions will affect only a small fraction of chip exports to China. The guidelines will be open to public comment for 30 days, after which they will take effect.
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