Biden Mulls New Restrictions On China's Advanced AI Chips Access: Report

The Biden administration is proposing measures aimed at limiting China’s ability to use an advanced chip architecture known as gate all-around (GAA).

Bloomberg, which broke the story citing anonymous sources, did not mention what those potential measures entail.

The timing of any final decision also remains uncertain.

The primary objective, per the report, is to hinder China’s capacity to develop sophisticated computing systems essential for constructing and operating artificial intelligence (AI) before it becomes widely available.

The measures are not expected to constitute a complete ban on GAA chip exports. They would instead target the technology required to manufacture them.

There are also preliminary discussions about restricting exports of high-bandwidth memory chips. These chips, produced by companies such as SK Hynix Inc. and Micron Technology Inc. MU, accelerate memory access and enhance AI accelerators. They are crucial for training AI software, which involves processing vast amounts of information.

However, it is uncertain whether a rule on high-bandwidth memory chips will materialize, as the GAA discussion is reportedly more advanced.

Major companies such as Nvidia Corp. NVDA, Intel Corp. INTC, and Advanced Micro Devices Inc. AMD, along with their manufacturing partners Taiwan Semiconductor Manufacturing Co. TSM and Samsung Electronics Co., are gearing up to commence mass production of semiconductors featuring the GAA design within the next year.

The U.S. has previously imposed several restrictions on the sale of advanced semiconductors and chipmaking tools to China.

What’s At Stake

Commerce Secretary Gina Raimondo has reiterated that the U.S. will continue to expand these measures as necessary to prevent the most advanced AI technology from reaching Beijing, due to concerns that it could enhance China’s military capabilities.

The Biden administration also faces a time crunch to issue additional regulations before the November presidential election.

Some U.S. allies are also exploring their own export control measures for GAA technology, as part of an informal agreement reached during recent trade talks.

The U.S. had already imposed restrictions on design software for GAA technology in 2022, following an agreement reached the previous year.

Market Reactions

U.S. semiconductor stocks, as tracked by the VanEck Semiconductor ETF SMH, weakened 0.3% Tuesday.

Shares of NVIDIA Corp. were 1% lower, while AMD and Taiwan Semiconductor Manufacturing Co. eased 0.9% and 1.4%, respectively.

The industry outperformers were Palantir Technologies Inc. PLTR, up 3.5%, Arm Holdings Plc ARM up 3.4%, and Broadcom Inc. AVGO, up 1.6%, with the latter expected to release its quarterly earnings on after the close on Wednesday.

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