Updated US Rules May Ban Sale of 'Fast' AI Chips to China

The US government’s updated rules on chip exports to China aim to stop American chipmakers from selling semiconductors that get around current restrictions, a top official said.

The new rules will be added to US restrictions on shipments of advanced chips and chipmaking equipment unveiled last October, and they are expected to be announced this week.

They will block some AI chips that fall just under current technical parameters while demanding companies report shipments of others, said the official, who provided information on condition of anonymity.

The latest crackdown on tech exports to China coincides with US efforts to thaw difficult relations between the world’s two largest economies. Several senior members of the Biden administration have met their Chinese counterparts in recent months, and the latest round of rules risks complicating the diplomatic effort.

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The Biden administration has said it designed the export curbs to keep US chips and equipment from strengthening China’s military.

But Beijing has accused the United States of abusing export controls to suppress Chinese companies. The restrictions marked a historic shift in US-China tech policy.

A spokesperson for the US Department of Commerce, which oversees export controls, declined to comment, and the Chinese embassy in Washington did not immediately respond to a request for comment.

Last year, government restrictions kept Nvidia, the world’s most valuable chipmaker, from shipping two of its most advanced AI chips to Chinese customers, chips that have become the industry standard for developing chatbots and other AI systems.

But Nvidia soon released new variants for the Chinese market that were less sophisticated and got around the US export controls. One, named the H800, has as much computing power at some settings used in AI work as the company’s more powerful but blocked H100 chip. Still, some key performance aspects are limited, according to a specification assessment.

‘Fast’ AI chips for data centres to be included

The US now plans to introduce new guidelines for AI chips that will restrict certain advanced datacenter AI chips that are not currently captured, the US official said.

While the official declined to identify which additional chips will be effectively banned, Nvidia’s H800 is a semiconductor sources have suggested the administration has wanted to block.

Nvidia, which is based in Santa Clara, California, did not immediately respond to a request for comment. But in June the company’s chief financial officer said that if the H800 and a related chip called the A800 were restricted, they did not anticipate it “would have an immediate material impact on our financial results.”

Chips meant for consumer products like laptops will be exempt from the new curbs, the official said. But companies will need to tell the Commerce Department when they are filling orders for the most powerful consumer chips to make sure they are not being used in ways that threaten national security, according to the official.

In order to keep AI chips the US views as too powerful from China, the official said the US planned to remove one of the parameters – the “bandwidth parameter” – it has used to restrict exports of certain AI data centre chips.

By removing this parameter, another guideline kicks in, widening the scope of chips covered. This would likely mean the speed at which AI chips talk to each other would be reduced.

This is important because training the largest AI models is impossible on one chip and requires many chips tied together. If one slows the speed they communicate at, it makes AI development more challenging and expensive.

The US also plans to introduce a “performance density” parameter to help prevent future workarounds, the official said, but declined to elaborate.

Washington wants notification of shipments

The updated rules also are meant to cover AI chips as technology evolves. The US will require companies to notify the government about semiconductors whose performance is just below the guidelines before they are shipped to China, the official said.

The government will decide on a case-by-case basis whether they pose a national security risk but they can be shipped unless the chipmaker is told otherwise.

The updates to the October 2022 rules may also close a loophole that gives Chinese companies access to American artificial intelligence chips through Chinese units located overseas.

The rules are not expected to include restrictions on access to US cloud computing services, or those of allies, but the US will seek comments on the risks of such access and how they might be addressed, the official said.

The Biden administration told Beijing of its plans to update the contentious rules this month, as part of a policy aimed at stabilizing relations between the superpowers.