[Insights] How Will China Respond to Increased US Restrictions on AI Chips and Semiconductor Equipment?

2023-11-10 Semiconductors editor

On October 17, 2023, the U.S. government once again expanded its restrictions on the export of semiconductor devices and products to China. The newly added control conditions now encompass NVIDIA’s L40S, A100, H100H800, as well as general-purpose AI server GPUs tailored for the Chinese market, such as A800 and H800. Additionally, AMD’s MI200 series, MI300 series GPUs, and Intel’s Habana Labs’ Gaudi 2, Gaudi 3 GPUs fall under the regulatory framework.

Recalling the U.S. government’s export restrictions on AI chips issued to IC design firms in September 2022, at that time, only A100, H100, and MI200 series were subjected to control, and the U.S. Department of Commerce granted NVIDIA and AMD a one-year buffer period.

In contrast, the recent regulations not only cover all mainstream AI server GPUs but also eliminate the buffer period for these chip companies. In essence, companies or institutions in countries not permitted for export can only acquire AI server chips with performance potentially inferior to NVIDIA L40S or AMD MI200 series for the next few years.

Furthermore, stricter control thresholds for lithography equipment have led to the inclusion of ASML’s DUV, the 1980Di, in the control list. This equipment is primarily used in the 28 ~ 7nm process. Previously controlled products were focused on the EUV 3000 series for 7nm and below processes and the DUV 2000 series for 16/14 ~ 5nm processes.

This move indicates that the U.S. government’s desire to control semiconductor process technology has officially extended to mature processes of 28nm.

The expanded U.S. controls on AI chips and semiconductor manufacturing devices not only target China but also countries that might collaborate with Chinese institutions and businesses in AI development.

In this scenario, China is left with only two viable options to establish efficient AI computing resources: (1) designing and mass-producing AI server chips itself or (2) utilizing the computing resources of cloud service providers.

As the U.S. is also discussing the potential inclusion of cloud service providers in semiconductor control policies and currently formulating relevant countermeasures, this path remains unreliable for China. Therefore, the only dependable option is to independently design and manufacture AI server chips.

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