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AI ‘chip ban’ explained – Nvidia and AMD impacted by proposal

US suggested Chip Ban will have damaging impact on Nvidia and AMD
Last Updated on June 28, 2023
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Under Biden’s administration, there is contemplation for more export controls on artificial intelligence chips. The US commerce department is preparing to update the export controls made last October to make it harder for China to acquire technology with military applications. Reports are saying that an AI chip ban could be in effect as early as July.

What is the AI Chip ban proposal?

The controls on AI chips will have a severe impact on companies such as Nvidia and Advanced Micro Devices (AMD). With the previous tightening of control in October, Nvidia responded by designing new graphics called the A800 and H800 to replace the advanced chips that were restricted under the rules. Jensen Huang claimed that this tightening of control has left his company with its “hands tied behind our back”.

With the consideration of new restrictions on exports of AI chips, it compromises the trading of even the specifically crafted A800 and H800. The new rules would ban the sale of A800 chips without a special U.S. export license. Shares of Nvidia (NVDA.O) fell more than 2% while AMD (AMD.O) fell about 1.5% after the news in trading. Alongside Nvidia and AMD, Micron is amongst the U.S. chipmakers that will be impacted by the Biden Administration.

To put it in financial terms, the ban last October threatened $400 million in Nvidia sales until the company located the workaround in the products of A800 and H800. Therefore, the new restrictions will have a huge impact on the current success of the companies -with Nvidia’s shares being up 187% and AMD’s shares being up 70% in 2023.

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What is China’s response to the Biden administration for the AI chip ban?

The proposal under the Biden administration would appear to have a severe impact on companies such as Nvidia and AMD as they would no longer be able to trade and sell their AI chips to China. Beijing has accused the US of trying to “contain” China. China has made seeming retaliatory moves to the bans by banning Chinese infrastructure operators from buying chips from Micron (an Idaho-based company).

Chinese premier Li Qiang has criticized “de-risking” policies by saying any attempt to de-risk from China was a “false proposition”. The US commerce department is yet to comment on the expected update.

Rosa is a Tech and Gaming writer for PCGuide. She has an interest in gaming and computer hardware, with a particular interest in gaming laptops. Her go to game is Minecraft!

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