Market News—The US government is considering more ways to prevent Chinese developers from purchasing US-made AI Chip Technology (semiconductor chips) through third parties. A Reuters report on October 13 said that the Biden administration is investigating a loophole that lets Chinese developers buy chips from the Huaqiangbei electronics area in Shenzhen, a city in southern China.
The report says that new rules on AI chips will be released this month. These rules will apply restrictions only for top US companies like Nvidia and AMD and all companies making similar products.
Earlier this year, the US government asked big chip makers like Nvidia to limit exports of their high-level semiconductor chips to some Middle Eastern countries. However, US regulators have not said they are blocking AI chip exports to the Middle East. Nvidia has warned that if it is excluded from China, it could hurt its long-term revenue. Most of Nvidia’s revenue comes from the US, China, and Taiwan, with less than 14% from other countries.
The Biden administration is also trying to find a way to prevent Chinese parties from accessing US cloud service providers like Amazon Web Services (AWS). However, the report says that solutions for this problem are “less clear.”
In July, US officials started considering restricting Chinese companies’ access to cloud computing services like AWS to protect the country’s advanced technology.
The US first imposed export controls on its most powerful semiconductor chip technology in October 2022. Since then, Washington has made these measures stricter and is still exploring other ways to limit the computing power of chips in the Chinese market.
China has also responded to these measures from the United States. In July, it said it would control exports of gallium and germanium, two main materials for making AI chips.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
