Biden is considering tightening AI chip controls to China through third parties

The United States government is considering additional measures to prevent Chinese developers from acquiring artificial intelligence (AI) semiconductor chips made in the United States by third parties.

According to an Oct. 13 Reuters report, people close to the matter said the Biden administration is targeting a loophole that allowed developers in China to buy chips from the Huaqingbei Electronics Area in Shenzhen, southern China.

The sources said that additional rules on AI chips will be issued this month and restrictions that previously applied only to top US players such as Nvidia and AMD will be applied to all companies that produce similar materials in the wider market.

Over the summer, the U.S. government imposed additional regulations on major chipmakers, including Nvidia, which currently leads the market in chip manufacturing. He asked the companies to limit the export of high-end semiconductor chips to “certain” Middle Eastern countries, among other minor details.

However, US regulators have denied outright banning AI chip exports to the Middle East.

In response, Nvidia warned regulators that long-term earnings results could be “harmed” if the company is “effectively excluded from all or part of China.” The majority of Nvidia's revenue comes from the US, China and Taiwan, with less than 14 percent from all other countries.

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Reuters sources said the Biden administration is trying to find a loophole to allow Chinese parties access to US cloud service providers such as Amazon Web Services (AWS). According to the report, these solutions appear to be “non-obvious”.

In July, US officials reportedly began considering restrictions on Chinese companies' use of cloud computing services such as AWS to protect the country's advanced technology.

The US will implement its first export controls on the most powerful semiconductor chip technology in October 2022.

Washington has since stepped up measures and is still considering further action to further limit the computing power of chips in the Chinese market.

China has also responded to the tough measures from the United States. In July, it said it would control exports of gallium and germanium, the two main materials used to make AI chips.

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