In a crackdown on exports of advanced technologies, US officials have informed Advanced Micro Devices (AMD) that its artificial intelligence (AI) chip tailored for the Chinese market is too powerful to be sold without a license. The move is part of the US government’s efforts to limit Chinese access to cutting-edge semiconductors, fearing that Beijing could gain a military advantage. While AMD had hoped to obtain permission from the US Commerce Department to sell the AI processor to Chinese customers, it has now been told that it must still obtain a license from the Bureau of Industry and Security.
AMD’s AI chip was designed to perform at a lower level than the company’s offerings outside of China. However, US officials insisted that a license is still necessary, leaving AMD uncertain about its next steps. California-based Nvidia, another semiconductor company, has also been facing challenges in selling its powerful AI chips to China, leading to a downgrade of its products to comply with US export rules.
The US export restrictions were first introduced in 2022, with an aim to restrict the sale of processors and other components that can develop AI models. Subsequently, the controls were strengthened in October 2023. Nvidia had initially designed a processor specifically for China that complied with the 2022 version of the rules. However, the company had to develop new, less-powerful products to align with the updated restrictions. Commerce Secretary Gina Raimondo has stated that she is examining the specifics of these components.
Nvidia has been sampling alternative AI chips for the Chinese market since the US restrictions took effect. AMD, on the other hand, has not publicly discussed its efforts to develop a new AI processor for China. When the restrictions were first implemented in 2022, AMD had believed that it would not be significantly affected. However, the company is now aggressively pursuing the AI chip market and recently launched a new MI300 line-up to compete with Nvidia’s processors. The China-tailored product from AMD is referred to as MI309.
The specific Chinese customer who was attempting to purchase AMD’s AI chips could influence whether the company is able to secure a license, if it decides to proceed. Leading Chinese tech firms, such as Tencent Holdings and Baidu, have already stockpiled enough powerful chips from Nvidia to enhance their chatbots' capabilities for the next year or two. Additionally, Huawei Technologies is developing its own AI semiconductors and chip-making capabilities, potentially filling the gap created by the US ban on Chinese companies.
The tension surrounding the sale of AI chips to China highlights the larger geopolitical competition between the US and China in the tech sector. As both countries vie for dominance in artificial intelligence and other advanced technologies, export restrictions and the development of alternative strategies become crucial factors. This ongoing saga will continue to shape the landscape of the semiconductor industry, affecting companies like AMD and Nvidia as they navigate the complexities of international trade and national security concerns.
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