The Biden Administration Implements New Restrictions on Chinese Access to AI Chips
The Biden administration has introduced a second round of restrictions aimed at preventing Chinese companies from obtaining American-designed artificial intelligence (AI) chips. These new measures are intended to close a loophole that allows China to access American chips from Huaqiangbei in Shenzhen. Last year, the US announced restrictions on the supply of advanced AI chips that it suspected China was using for military purposes.
Expert Highlights Challenges of Absolute Curbs
An expert from the Center for a New American Security, Timothy Fist, explains that while certain chips cannot be exported from the US to mainland China, Chinese employees working for remote subsidiaries of American companies can legally access these chips anywhere in the world. This exposes a significant challenge in implementing absolute curbs on chip access.
The US is concerned that China could utilize these chips to develop unmanned combat systems and is also working on limiting Chinese access to Amazon Web Services, which is the world’s largest cloud provider.
US Investment in Chinese AI Likely to Decline
In August, President Joe Biden imposed restrictions on American investment in Chinese quantum computing, semiconductors, and artificial intelligence. These restrictions are expected to deter investors from engaging in other Chinese sectors as well. Sequoia Capital, a renowned US venture capitalist firm, recently divided into two separate business units to focus on investing in the India-Southeast Asia region and China due to rising geopolitical tensions and economic challenges.
China’s Interest in AI may be Overestimated by the US
While Chinese companies may lag behind in AI design and manufacturing, they excel in solar, car, and medical manufacturing. These sectors still offer attractive investment opportunities. Additionally, Chinese laws governing AI development indicate that the government may not prioritize providing its citizens with access to the latest large-language models. Restrictions have been introduced to limit the information AI product developers can use to train their models, including privacy and intellectual property rights.
Hot Take: US-China AI Chip Restrictions and Implications
The Biden administration’s new restrictions on Chinese access to American-designed AI chips aim to close a loophole that allows China to obtain these chips from certain locations. However, implementing absolute curbs poses challenges as Chinese employees of remote subsidiaries can legally access the chips anywhere in the world. These restrictions are part of broader efforts by the US to limit Chinese access to advanced technologies like AI and cloud services. While these measures may deter American investors from engaging in Chinese sectors, such as quantum computing and semiconductors, China’s expertise in other industries like solar and medical manufacturing still presents attractive investment opportunities.
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