© Reuters. FILE PHOTO: Flags of China and U.S. are displayed on a printed circuit board with semiconductor chips, in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration/File Photo
INTC
-0.39%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
AMAT
-0.68%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
LRCX
-0.99%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
XLNX
0.00%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
NVDA
-3.25%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
By Alexandra Alper, Karen Freifeld and Stephen Nellis
WASHINGTON (Reuters) -The Biden administration plans to halt shipments to China of more advanced artificial intelligence chips designed by Nvidia (NASDAQ:NVDA) and others, part of a raft of measures released on Tuesday that seek to stop Beijing from receiving cutting-edge U.S. technologies to strengthen its military.
The rules, which go into effect in 30 days, restrict a broader swathe of advanced chips and chipmaking tools to a greater number of countries including Iran and Russia, and blacklist Chinese chip designers Moore Threads and Biren.
The new measures close loopholes in regulations released last October and will probably be updated “at least annually,” Commerce Department Secretary Gina Raimondo told reporters late on Monday.
The goal is to limit China’s access to “advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to (Chinese) military applications,” she said, stressing the administration was not seeking to hurt Beijing economically.
She said China will still import hundred of billions of dollars worth of U.S. semiconductors.
A spokesperson for the Chinese embassy said it “firmly opposes” the new restrictions, adding that “arbitrarily placing curbs or forcibly seeking decoupling to serve (a) political agenda violates the principles of market economy and fair competition (and) undermines the international economic and trading order.”
REPORT FINDS U.S. AI FEEDS CHINA’S MILITARY
The new measures demonstrate the Biden administration is struggling to slow the flow of chips and chipmaking tools into China, even as concerns mount over the role U.S. technology is playing in modernizing Beijing’s military.
Reuters reported in June that the very AI chips barred by prior regulations could be purchased from vendors in China’s Shenzhen.
Georgetown University’s Center for Security and Emerging Technology found in a June 2022 report that out of 97 individual AI chips procured via Chinese military tenders over an 8-month period in 2020, nearly all of them were designed by Nvidia, Xilinx (NASDAQ:XLNX), Intel (NASDAQ:INTC), and Microsemi.
AI capabilities, aided by supercomputing and advanced chips, improve the speed and accuracy of military decision-making, planning and logistics, according to the regulations released Tuesday.
CHINA-ONLY CHIPS HIT
In a statement following publication of the rules, top U.S. AI chip designer Nvidia said it complies with regulations and does not expect a meaningful hit to near-term results.
Nvidia’s business has soared since the imposition of last year’s rules because its China-only chips are still better than alternatives. The firm is currently selling almost every chip it can procure as worldwide demand outstrips supply, but would be hurt in the long term as Chinese chip firms look elsewhere to fill any voids left by U.S. companies.
The company has made chips such as the A800 and H800 that walked up to the line of the previous rules to continue selling to China, and AMD, also impacted by the rules, has said it plans a similar strategy.
Nvidia’s shares fell 3.7%, while shares in AMD and another rival AI chipmaker, Intel, slid 0.6% and 1% respectively.
The new rules will exempt most consumer chips used in laptops, smartphones and gaming, though some will be subject to licensing and notification requirements by U.S. officials.
TAKING ON CHIPLET TECHNOLOGY
The previous rules imposed a two-pronged test that measured both a chip’s computing performance and its ability to communicate with other chips, an important measure in AI supercomputers where thousands of chips are strung together to chew through huge amounts of data.
Nvidia and Intel created special chips for the Chinese market that retained the powerful computing capabilities but limited communications speeds to stay inside the previous rules.
The new rules impose limits on how much computing power a chip packs into a certain size, a measure designed to prevent workarounds using new “chiplet” technology that China has said will be central to its semiconductor industry’s future.
Chinese firms Biren and Moore Threads, whose U.S. suppliers will now face a tough licensing requirement before shipping products to them, are both startups founded by former Nvidia employees and aim to compete with the U.S. AI chip giant.
Biren said it firmly opposes its blacklisting and will appeal to the U.S. government to reexamine the decision. Moore Threads said it strongly disagrees with its addition to the trade blacklist.
LICENSING EXPANDED
The new measures also expand licensing requirements for exports of advanced chips to more than 40 additional countries that present risks of diversion to China and are subject to U.S. arms embargoes.
That measure appears to build on a letter received by Nvidia in August that it described as restricting shipments of its A100 and H100 chips beyond China to other regions including some countries in the Middle East.
Confirming a Reuters report, chips will be barred from being sent to units of firms located anywhere in the world if their parent companies are headquartered in China, Macau and other arms embargoed countries.
The Biden administration also hit 21 countries outside China with a licensing requirement for chipmaking tools, over fears the equipment could be diverted to China and other national security concerns.
It also added to the list of equipment restricted from going to that country to include some deep ultraviolet (DUV) lithography systems, going beyond recent Dutch regulations to keep the Netherlands’ ASML from sending older DUV models and spare parts to some advanced Chinese chip factories, confirming another Reuters report.
DUV is less advanced chipmaking equipment than state-of-the art extreme ultraviolet equipment (EUV), which has already been withheld from China, but can make chips nearly as advanced at greater cost.
ASML said in a statement the new measures would likely have an impact on “the regional split of our system sales” over the medium to long-term, but the company did not expect to see a “material impact” on its financial outlook for 2023 or the longer term.
Shares of rival U.S. equipment makers Lam Research (NASDAQ:LRCX) was flat while Applied Materials (NASDAQ:AMAT) traded up 0.6% and KLA down 1.3%.
“We don’t think incremental semiconductor equipment restrictions are likely to have significant long term effects” on equipment suppliers, Wolfe Research said in a client note.
KLA declined to comment. Lam and Applied did not immediately respond to requests for comment.
U.S. officials said Chinese counterparts were warned the rules were coming by Raimondo, National Security Advisor Jake Sullivan, and Treasury Secretary Janet Yellen, confirming a Reuters report.
The Semiconductor Industry Association said in a statement it was “evaluating the impact” of the new rules and urged the administration to work with allies. “Overly broad, unilateral controls risk harming the U.S. semiconductor ecosystem without advancing national security,” the group said.
Source: Investing.com
