The United States Strategy to Minimize Sale of AI Chips: Brings China to its Knees

News JVTech US wants to bring China to its knees: Strategy is to minimize sale of AI chips

Published on 06/30/2023 at 19:15

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Blocking the development of new Chinese AI seems to have become one of the priorities of the American government. The United States has already brought down tons of economic sanctions on China, especially in the chip industry. Today, we learn that a new wave of ever more severe restrictions could fall on the Middle Kingdom.

The United States and its allies are going after the Chinese chip industry

On JVTECH, we’ve been talking to you for months about the various tremors that are shaking the main players in the shadows of the tech world. Here, we are not going to come back to each of the episodes of this technical and geopolitical saga, but remember one essential thing: Within the semiconductor industry, an essential component of all high-tech products ranging from smartphones to cars, two superpowers are waging an economic war: China and the United States.

The US government has never hidden its animosity towards the Middle Empire, and, in this war, it is indeed the administration of Joe Biden which most often goes on the offensive. Its goal: to isolate China from the other heavyweights of the chip industry (Japan, South Korea, Germany, the Netherlands, etc.). Over the months, a kind of “Westernized bloc” has formed and China must withstand all its attacks. The latest is fresh and we were telling you about it on June 27, 2023: the sword of the Netherlands, raised by the arm of Uncle Sam, has just fallen heavily on Chinese industry. Today, the pressure on China is stronger than ever.

It is very likely that the race for AI, which has become a major topic in the tech world, weighs heavily in these radical decisions against China. In this dynamic, we have just learned via our colleagues from the Wall Street Journal that the U.S. relentlessness is likely to continue faster and stronger than most experts imagined.

In September 2022, the USA had already pronounced a series of sanctions concerning chips specifically dedicated to training artificial intelligence systems. Ihe Asian giant has partly succeeded in circumventing American measures… But for how long ? For you to understand all the issues of the moment, we must go back to what happened ten months ago.

When the September 2022 restriction was activated, the United States banned NVIDIA from selling its most advanced graphics processors for artificial intelligence applications. This prevented China from seizing the two most powerful “weapons” in the industry: the A100 and H100 graphics cards. Without these gems of tech, training elite AI models becomes nearly impossible.

Not having official access to the graphics power of the A100 and H100, China massively bought slightly more modest GPUs: the A800s and the H800s. Even with a lower bandwidth, these products represent a more than acceptable alternative to the A100 and H100 behemoths.

And then, the Chinese industrialists did not completely let themselves go. In real life, they have almost always managed to find NVIDIA A100s and H100s thanks to certain more obscure suppliers, from the underground markets of Shenzen or Hong Kong. According to Reuters, the Chinese are finding A100s and H100s at around $20,000 on the black market. Companies with more means can also obtain small batches of GPUs imported from India, Taiwan or Singapore. In an official statement, Nvidia states: “If we receive information that a customer is violating their agreement with us and is exporting restricted products in violation of the law, we will take immediate and appropriate action”.

Soon new American sanctions against China?

Well aware of these practices, the US Department of Commerce understands that preventing US tech companies from exporting their products to China is not enough. This is how, according to the Wall Street Journal, other restrictions, tougher and more extensive, could soon see the light of day. The economic daily informs us that these new measures would come into force extremely quickly, from July 2023, in order to prevent China from buying A800 and H800 graphics cards as quickly as possible, but also to better control sales of the A100 and H100.

You are probably already familiar with “cloud gaming”, which allows you to use a high-powered computer remotely thanks to a simple internet connection and to play extremely greedy games from a PC or an entry-level Mac. Imagine that this cloud system would have been used by some Chinese AI companies to circumvent restrictions on chip sales. So, new US sanctions against China could, according to the WSJ, block access to cloud platforms for Chinese companies.

Be careful, even if the source is reliable, do not take this information as definitively acquired. Biden’s government plans are not final, and it is likely that no decision will be made until we know how negotiations went with Treasury Secretary Janet Yellen, who will be in China in early July.

2023-06-30 17:15:03


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