ALBAWABA – The United States (US) will tighten the China AI chips export ban, US Commerce Secretary Gina Raimondo said on Tuesday, causing Nvidia stocks to plummet on Wall Street on Wednesday, in response to Huawei launching a new smartphone featuring a powerful home-grown advanced microchip.
"Today's updated rules will increase the effectiveness of our controls and further shut off pathways to evade our restrictions," said Raimondo, as reported by Agence France-Presse (AFP).
The new rules will come into effect in 30 days, according to Reuters.
The goal is to limit China's access to "advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to (Chinese) military applications," the commerce secretary said.
The US administration is not seeking to hurt Beijing economically, Reuters reported Raimondo as saying at a press conference on Tuesday.
Nvidia's share price sank sharply following the announcement and closed down 4.7 percent, according to AFP, while rival chip makers Intel and AMD also closed lower.
The China AI chips export ban may not be as effective as thought to be in terms of curbing the flow of advanced chips and chipmaking technology - Shutterstock
The chip giants have lobbied hard to prevent further curbs on their business in China, but to no avail.
In August, Nvidia warned against the tougher curbs, saying it would lead to "a permanent loss" in competitiveness in China.
The Semiconductor Industry Association on Tuesday criticized any "overly broad, unilateral controls" that would punish the industry "without advancing national security", according to AFP.
Trade curbs "encourage overseas customers to look elsewhere" for the chips they need, it added.
After the US announced the initial export ban last year, China responded with its own curbs, including the introduction of a license requirement to export the rare minerals vital in the production of semiconductors.
These measures are the latest chapter in the tech-trade war that started under the Trump administration to limit Beijing's ability to gain ground and become a leading tech economy.
They demonstrate that the Biden administration is struggling to slow the flow of chips and chipmaking tools into China, according to Reuters, despite the China AI chips export ban. Even as concerns mount over the role US technology is playing in modernizing Beijing's military.
