The US fears that China would apply the AI chips in warfare and hacking.

The Biden administration is considering new restrictions on exporting AI chips to China due to concerns over technology’s power in the hands of U.S. rivals. The Commerce Department may soon stop shipments of chips made by Nvidia (NASDAQ: NVDA) and others to China without a license.

These measures would codify and expand existing export controls announced in October. They could hinder China’s AI capabilities after previous restrictions on advanced AI chips. Nvidia responded with a lower-performing chip, the A800, for the Chinese market. However, the new restrictions would ban even A800 chip sales without a license. (WSJ)

Leasing of cloud services to Chinese AI firms is also under scrutiny to circumvent export bans. Timing for the rules is uncertain as chip makers urge leniency. The administration may wait until Treasury Secretary Janet Yellen’s visit to China in early July.

Discussions on AI chips follow concerns about generative AI tools like OpenAI’s ChatGPT and potential security risks. The Commerce Department introduced export control measures on advanced semiconductors and chip-making machinery in October but has not formalized them.

The US is also seeking cooperation from the Netherlands and Japan to unify controlled items. However, South Korean and Taiwanese chip makers may continue operations in China for less advanced chips.

The administration is also considering an executive order to restrict U.S. investment in China and other rivals.

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