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US Readies Next Shot In Key China Trade War: REPORT

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The Biden administration is considering further action to restrict the export of high-powered AI chips to China, the latest in an ongoing tech trade war, The Wall Street Journal reported Tuesday, citing sources familiar with the matter.

The Department of Commerce could issue rules within weeks to block shipments of such chips by U.S. companies to China unless they receive a license from the U.S. government to permit the sale, according to the WSJ. The move would follow actions taken last fall by the administration to limit sales of such chips to China, although dominant U.S. chipmaker Nvidia resumed sales shortly thereafter with a weaker chip that did not run afoul of U.S. restrictions.

The Commerce Department’s new rules would restrict the sale of these weakened Nvidia chips, and block the sale of most AI chips made by Nvidia’s smaller U.S. rival, Advanced Micro Devices (AMD), the WSJ reported. The Biden administration is increasingly considering AI as a national security risk, citing the potential damage caused by computer viruses, chemical weapons or other AI-powered weapons.

“We are protecting our foundational technologies with a small yard and high fence,” Jake Sullivan, White House national security advisor said in April, according to the outlet.

Nvidia, $NVDA, and Advanced Micro Devices, $AMD, are down over three percent in after hours.

In the after hours a report was released that the Biden administration is considering a new ban on sales of AI chips to China. pic.twitter.com/vb1KwjJZ2n

— unusual_whales (@unusual_whales) June 28, 2023

The Biden administration is also considering restrictions on the leasing of cloud internet resources to Chinese firms, the WSJ reported. As Chinese organizations — some affiliated with the Chinese military — scrambled last fall to find alternatives to powerful U.S.-made chips, cloud technology from companies like Google and Amazon that run on such chips was an attractive option for some groups.

President Joe Biden has made competition with China a priority — although experts have questioned whether certain policies, such as his promotion of electric vehicles, may actually play into China’s dominance of key industries —as relations between the two superpowers have worsened. Biden has said throughout his tenure that his administration seeks “competition” but not “conflict” with China, despite his recent statements that Chinese President Xi Jinping is “dictator.”

Nvidia declined to comment, while AMD and the Commerce Department did not immediately respond to a DCNF request for comment.