Sep 7, 2022
Reading time
2 min read
Gif shows closeup images of graphics processing units from Nvidia and AMD.

The U.S. government blocked U.S. makers of AI chips from selling to China, adding to existing sanctions that target Russia.

What’s new: The Department of Commerce restricted sales of Nvidia’s and AMD’s most-advanced chips for training and running large AI models, Reuters reported.

How it works: U.S. officials didn’t detail the specifics of the ban. Nvidia said it would stop selling its A100 and H100 graphics processing units (GPUs) to China. AMD said the action affects its MI250 GPU.

  • U.S. officials told AMD that the rule “will address the risk that products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China.”
  • AMD said the restrictions will not significantly impact its bottom line. Nvidia said it could lose $400 million in sales in the third quarter, about 6 percent of sales in the same quarter of last year.
  • The U.S. also blocked sales of equipment for fabricating cutting-edge chips to Semiconductor Manufacturing International Corp., which is owned partly by the Chinese government.

China’s reaction: “This violates the rules of the market economy, undermines the international economic and trade order, and disrupts the stability of global industrial and supply chains,” a foreign ministry spokesperson said. China hasn’t announced countermeasures, but some analysts anticipate that it will further increase funding to its domestic semiconductor sector.
Behind the news: Russia has faced chip embargoes by South Korea, Taiwan, and the U.S. in response to its February invasion of Ukraine. In 2020, the U.S. government required foreign chip makers that use U.S. equipment to receive special permission before doing business with the Chinese tech company Huawei.

Why it matters: AI is increasingly intertwined with geopolitics. China has repeatedly stated its intention to achieve “AI supremacy” and outpace the U.S. China, however, is still largely reliant on imported semiconductors, so the U.S. ban could hobble its ambitions.
We’re thinking: An AI chip may be designed in the U.S. and manufactured in Taiwan using equipment from the Netherlands. This globalized supply chain works well when international tensions are low, but rising tensions pose risks to both progress in AI and the security of several countries.


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