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US Considers Imposing AI Chip Restrictions on Chinese Companies Overseas

Updated: Jan 8

The Biden administration is reportedly exploring the possibility of closing a loophole that allows Chinese companies to access American artificial intelligence (AI) chips through their overseas units.

Semiconductor chips
Credits: REUTERS

This move comes as the United States seeks to tighten restrictions on the export of AI chips and chipmaking tools to China, in an effort to curb its military advancements.


The new restrictions are expected to be announced soon, and the closure of this loophole may be included. In the initial round of restrictions, the Biden administration allowed overseas subsidiaries of Chinese companies to have unrestricted access to the same semiconductors. This meant that the chips could easily be smuggled into China or accessed remotely by users based in China.


However, it has been reported that these chips, which are prohibited under US regulations, can be purchased from vendors in the Huaqiangbei electronics area in Shenzhen, China.


The Biden administration is now considering ways to address this loophole, highlighting the challenges it faces in cutting off China's access to top AI technology and the difficulty of plugging every gap in export controls. Chinese firms have been purchasing chips for use in data centers abroad, with Singapore being a major hub for cloud computing.


While it is illegal to ship AI chips to mainland China under US law, it is challenging for the United States to monitor and control these transactions. China-based employees can legally access the chips located at foreign subsidiaries remotely. The extent of this problem is still unknown, but it has poses a significant concern for the US government.


China's AI capability heavily relies on its access to US chips. A report by the Center for Security and Emerging Technology (CSET) found that out of 97 AI chips procured by the Chinese military in 2020, nearly all of them were designed by US-based companies such as Nvidia, Xilinx, Intel, and Microsemi. The United States has been working to close other loopholes that allow the entry of AI chips into China, including restricting shipments to other regions beyond China.


The Biden administration is also grappling with the issue of Chinese parties accessing US cloud providers, such as Amazon Web Services, which offer AI capabilities to their customers. The challenge lies in finding a solution to prevent Chinese entities from legally accessing the same chips from anywhere in the world.


In summary, the Biden administration is considering closing a loophole that allows Chinese companies to access American AI chips through their overseas units. This move is part of the US government's efforts to restrict China's access to top AI technology and prevent the smuggling of chips into China. The extent of the problem and the effectiveness of the proposed restrictions remain to be seen.

 
  • The Biden administration is exploring closing a loophole that allows Chinese companies to access American AI chips through their overseas units.

  • The initial round of restrictions left overseas subsidiaries of Chinese companies with unrestricted access to the same semiconductors.

  • Chinese firms have been purchasing chips for use in data centers abroad, with Singapore being a major hub for cloud computing.


Source: REUTERS

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