U.S. authorities are considering strengthening an export control regulation aimed at reducing the amount of computational power that chips can have in order to reduce the flow of artificial intelligence chips to China, according to reports quoting people with knowledge of the situation,.

Last October, the Biden administration unveiled a comprehensive set of regulations with the goal of immobilising China’s semiconductor industry while the United States pours billions of dollars in subsidies into its own chip industry.

According to two individuals, an update to those regulations could appear by the end of July, but one source issued a warning that such U.S. initiatives involving China sometimes experience delays.

The US Department of Commerce declined to respond.

Colette Kress, the chief financial officer of Nvidia, stated during an investors presentation on Wednesday,

 “Over the long-term, restrictions prohibiting the sale of our data center GPUs to China, if implemented, would result in a permanent loss of opportunities for U.S. industry to compete and lead in one of the world’s largest markets and impact on our future business and financial results.”

The Biden administration is reportedly mulling new limitations on the export of AI technology to China, according to a Wall Street Journal report from Tuesday.

One of the regulations from October restricted the sale of chips in China that can offer the computing power required to develop artificial intelligence technologies similar to ChatGPT. This restriction immediately had an impact on sales of products from Nvidia Corp. and Advanced Micro Devices Inc. and would probably have an impact on future offerings from Intel Corp.

Nvidia, whose dominant position in the AI chip market helped make it worth $1 trillion earlier this year, would be severely hurt by the potential regulatory tightening.

“”We do not anticipate that such additional restrictions, if adopted, would have an immediate material impact on our financial results,” Nvidia’s Kress said on Wednesday.

The effectiveness of the October rule in halting Chinese corporations’ development of AI systems has been questioned.

There were reports month that large Chinese corporations like Tencent Holdings want to utilise Nvidia’s export-compliant chips to decrease the time it takes to train massive AI systems by more than half. Nvidia has created customised chips for the Chinese market that comply with the October limitations.

There are currently two limitations related to AI chips. One limitation relates to the speed of chip communication, which is significant because ChatGPT and other AI systems call for thousands of chips to be connected together. The chip’s computing capacity is the subject of the other limitation.

According to a specification sheet obtained by Reuters, Nvidia’s chip for the Chinese market, the H800, has chip-to-chip speeds that are constrained but has as much computational capability as the company’s chip for the rest of the world at some settings used in AI work.

Intel chose not to respond. AMD opted not to respond. AMD has previously claimed that the regulations will not have an effect on its financial performance.

(Adapted from CNBCTV18.com)

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