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Latest US Chip Controls Will Limit China’s AI Development

FILE - A staff member demonstrates live streaming at a booth from Chinese technology firm Alibaba at the China International Fair for Trade in Services in Beijing Sept. 2, 2022. The U.S. expanded export controls on advanced chips, including those used for artificial intelligence.
FILE - A staff member demonstrates live streaming at a booth from Chinese technology firm Alibaba at the China International Fair for Trade in Services in Beijing Sept. 2, 2022. The U.S. expanded export controls on advanced chips, including those used for artificial intelligence.

The latest U.S. expansion of export controls on advanced chips, including those for artificial intelligence, as well as chipmaking tools will make it difficult for China to develop in that sector, analysts say.

Emily Benson, director of the trade and technology program at the U.S. think tank CSIS, told VOA Mandarin that China should not be surprised by the rules announced this week because they are not a major departure from those proposed last October.

She said the new regulations ensure clarity about the goals of the original rules, and the chip ban was a longstanding issue.

In July, CEOs of U.S. chipmakers including Intel, Qualcomm and Nvidia met with U.S. Secretary of State Antony Blinken to urge a halt to more controls on chip exports to China. That meeting came after China announced restrictions on the export of materials used to construct chips, a response to escalating efforts by Washington to curb China's technological advances.

The most recent controls, announced on Tuesday, expand export restrictions on advanced chips and go into effect in 30 days. The new controls also restrict the export of equipment and tools for chip production to other countries, including Russia and Iran, in a move designed to prevent transshipment of advanced chips to China.

The U.S. also put Moore Thread and Biren Technology, two Chinese developers of graphics processors, on Washington’s Entity List. This has the potential to bar them and 13 subsidiaries from access to things such as U.S. chip design software.

The list, published by the U.S. Department of Commerce, already includes Chinese telecoms giant Huawei Technologies and China’s memory chipmaker Yangtze Technologies.

The new measures close loopholes in regulations released last October and will probably be updated "at least annually," Commerce Department Secretary Gina Raimondo said on Monday. Reuters reported that a spokesperson for the Chinese Embassy in Washington said it "firmly opposes" the new restrictions. Moore Threads and Biren Technology issued statements protesting the new regulations.

Wang Shiow-wen, an assistant research fellow at Taiwan's Institute for National Defense and Security Research, said that because training large AI models requires a vast number of advanced AI chips, the latest move by Washington shows its determination to block Beijing from obtaining the necessary chips through any channel.

"I think what the United States is doing is gradually becoming more like a precise strike in military terms, meaning it is now operating this thing more delicately," she said.

Wang said China's Huawei’s unexpected release in August of new mobile phones, Mate 60 and Mate 60 Pro, using advanced 7-nanometer technology may have triggered the new chip controls.

Raimondo called Huawei’s development "incredibly disturbing." She told a Senate Commerce Committee hearing on Oct. 4. “We need different tools. … We need additional resources around enforcement.”

"We don't want to be more restrictive than necessary," Raimondo said at a press conference on Oct. 17. "The export controls are not designed to impair China's economic growth."

But analysts say the U.S. appears to be blocking China's semiconductor industry because if China's technologies continue to develop, they may innovate and break through U.S. restrictions to develop slightly higher-end chips.

They point to two recent developments that seem beneficial to China but work against its long-term development of semiconductors.

On Oct. 13, the U.S. announced it would allow South Korea's SK Hynix and Samsung to keep receiving some coveted U.S. chipmaking tools at their Chinese plants.

On the same day, TSMC, the Taiwanese company that is the world’s largest contract manufacturer of semiconductor chips, said it expected to receive permanent authorization to continue operating a chip manufacturing factory in Nanjing.

It had previously been granted an extension to a waiver allowing it to supply U.S. chip equipment to its factories in China, according to the Taipei Times.

Chiu Chih-chang, an adjunct professor at the Department of Statistics at Tamkang University in Taiwan, said South Korean semiconductor manufacturers expanded their chip manufacturing in China more than 10 years ago, and the scale of their investment is among the world’s largest for the sector.

China’s sluggish post-COVID economy has reduced its demand for chips and the U.S. semiconductor bans have limited the South Korean manufacturers’ growth in China, Chiu said.

But China's domestic chipmakers Yangtze Memory Technologies Corp. and Changxin Memory Technologies have increased their share of the domestic market, which Chiu predicts will end with a fierce price war.

Faced with decreased profits, China's semiconductor industry will be limited in what it can spend on development of new chip technologies.

Chiu said of Washington allowing U.S. tools to be used by foreign firms operating in China, "It's a strategy favoring the U.S., not a favoring [for China]."

Chiu said the U.S. has adopted different strategies to prevent China from producing advanced AI while curbing China's growing influence in traditional semiconductor manufacturing and design and both will make it more difficult for China to continue developing its semiconductors.