Daily Management Review

With New China AI Chip Restrictions, The US Targets A Critical Market Niche


The US increased its efforts to halt the flow of advanced technology to China by instructing Nvidia Corp. and Advanced Micro Devices to stop sending their flagship artificial intelligence chips to the country.
While the news shocked the chip sector, sending the Philadelphia semiconductor index down 1.9 per cent and Nvidia and AMD down 7.6 per cent and 3 per cent, respectively, the letters from US officials appeared to target a narrow but critical part of China's computing industry.
The regulations appear to be centered on GPUs, which have the most powerful computing capabilities, a critical but niche market with only two significant players, Nvidia and AMD.\
Intel Corp, their only potential competitor, is attempting to enter the market but has yet to release competitive products.
Originally designed for video games, GPUs, or graphic processing units, are now used for a broader range of applications such as handling artificial intelligence tasks such as image recognition, categorizing cat photos, and scouring digital satellite imagery for military equipment. Because all of the chip suppliers are American, the United States has complete control over access to the technology.
Some national security experts thought the US move was long overdue.
GPUs "have been totally uncontrolled to China and to Russia, so in a lot of ways I see this action as kind of catching up to where the controls probably should have been if we were really serious about trying to slow China’s AI growth," said Emily Kilcrease, a senior fellow at the Center for a New American Security.
The United States Department of Commerce, which declined to comment on the specifics of any new rules it may be developing, appears to have narrowly focused the effort.
Nvidia stated that only its A100 and H100 chips would be affected. These chips cost tens of thousands of dollars each, with complete computers containing the chips costing hundreds of thousands.
Similarly, AMD stated that the new requirement affects only its most powerful MI250 chip, a version of which is used at Oak Ridge National Laboratory, one of several U.S. supercomputing sites that support nuclear weapons. Less powerful processors, such as AMD's MI210 and lower, are unaffected.
The affected chips all have the ability to perform calculations for artificial intelligence work quickly, on a massive scale, and with high precision. Less powerful AI chips can work quickly and with lower precision, which is sufficient for tagging photos of friends and where the cost of an occasional mistake is low - but not for designing fighter jets.
The only significant market competitor to AMD and Nvidia's chips is Intel's yet-to-be-released Ponte Vecchio chip, whose first customer is Argonne National Lab, another U.S. facility that supports nuclear weapons.
"While we understand the U.S. Government is continuing to look at new restrictions, no new export control rules have been published and there are currently no changes to our business," Intel told Reuters in a statement. "We are closely monitoring the process."