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U.S. Warns China to Expect Updated Rules to ‘Curb Shipments of AI Chips’

U.S. Warns China to Expect Updated Rules to ‘Curb Shipments of AI Chips’

In August, the Chinese shut down the export of two important rare earth metals used in semiconductor manufacture: gallium and germanium.

In July, I reported that the US was considering new chip restrictions on exports to China related to the rapid development of artificial intelligence (AI) capabilities.

It looks like those restrictions are about to be implemented.

The Biden administration warned Beijing of its plans to update rules that curb shipments of AI chips and chipmaking tools to China as soon as early October, a U.S. official said, a policy decision aimed at stabilizing relations between the superpowers.

The Commerce Department, which oversees export controls, is working on an update of export restrictions first released last year. The update seeks to limit access to more chipmaking tools in line with new Dutch and Japanese rules, other sources said, and to close some loopholes in export restrictions on artificial intelligence (AI) chips.

“The PRC has been expecting an update around the one year anniversary, based on conversations with administration officials,” the U.S. official said, using the abbreviation for People’s Republic of China. The original rules were published Oct. 7, 2022.

Supposedly, the move will help soothe trade tensions between the US and China.

Providing China with a heads up about the rules is part of a broader bid by the Biden administration to stabilize relations with Beijing. The outreach comes after a decision by the U.S. to shoot down a Chinese spy balloon sharply escalated tensions in February.

The Biden administration has also sent a series of high-level officials to China, including Commerce Secretary Gina Raimondo in August. Additionally, National Security Advisor Jake Sullivan held talks with Chinese Foreign Minister Wang Yi in September.

The restrictions released last October sought to prevent U.S. technology from being used to strengthen the Chinese military by cutting off its access to advanced AI chips and curbing its ability to import the most sophisticated chipmaking tools from the United States.

The Department of Commerce declined comment, while a spokesperson for the Chinese embassy in Washington had “nothing to offer,” when asked for comment on the warning.

However, that horse may have left the barn already. In August, the Chinese shut down the export of 2 important rare earth metals used in semiconductor manufacture: gallium and germanium.

China did not export any germanium and gallium products in August, after export curbs kicked into effect at the start of that month for these two chipmaking metals.

Customs data on Wednesday showed that China exported zero germanium product last month, down from 8.63 metric tons in July, Reuters reported.

July germanium exports were more than double that of June’s, as purchases spiked ahead of the effective date for the curbs that are part of China’s escalating war with the U.S. and its allies over access to strategic technology.

There were also no exports of gallium products in August, compared to the 5.15 tons exported in July, customs data showed.

Here’s hoping Vietnam breaks China’s near monopoly on this vital resource.

Vietnam plans to restart its biggest rare-earths mine next year with a Western-backed project that could rival the world’s largest, according to two companies involved, as part of a broader push to dent China’s dominance in a sector that helps power advanced technologies.

The move would be a step toward the Southeast Asian country’s aim of building up a rare-earths supply chain, including developing its capacity to refine ores into metals used in magnets for electric vehicles, smartphones and wind turbines.


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J Granholm and her EV entourage made a stop by Flex in W Columbia, SC during her “Road Trip” from Atlanta to Charlotte to gush over the ABB ev quick-chargers and EnPhase IGBT inverters that convert DC current from solar panels into 277 volts AC that feeds your house…and the power grid. Funny thing about all that is that it is all a front for a Chinese company called Shinzen Sinvo Automatic Machinery Company and the EnPhase inverters are WiFi and Bluetooth enabled. China will eventually control our power. Toshiba bought Westinghouse in 2004 then sold 51% of stock to a consortium of CCP investors in 2006.
Columbia Nuclear is the only facility in the US that is producing nuclear fuel rod assemblies, and that plant is responsible for 75% of electricity for France.
Google “Biden Chips Initiative”.
We have been betrayed.

Either we say China is our enemy (which I say) or we don’t.

Probably too late.
They have too much of our pharmaceutical, electronics and parts mfg to be indispensable. We cut them off, we shut down.

Of course they will implode without our dollar, but when junior’s cellphone doesn’t work, Congress/President will surrender.

    CommoChief in reply to 1073. | October 6, 2023 at 1:10 pm

    IMO in the short to medium term it is too late. The DC establishment and neocons of both parties allowed western corporate desire for cheap labor costs and to some degree cheap materials costs to take precedence over common sense. We don’t make flipping aspirin much less 75%+ of the things required for a modern society to flourish.

    The Chinese govt holds about a $ Trillion of our $33 Trillion Federal debt. Individuals and China Corp hold lots more Federal govt debt along with State/Local debt and US corporate debt. That’s a whole lot of USD they have. Would they lose access to consumer market in a more open cold war or worse a hot war? Sure but we ain’t ready not even close to ready to be cut off from even the basic materials, rare earth metals, precursor chemicals and so on that they ship us, much less finished consumer products. Give it a decade of concerted effort across govt and industry and we might be prepared, maybe.

There is an ongoing chip war between the USA and China. The US has embargoed any equipment used in small chip manufacture. The Chinese have been pretty much limited to only the 70 and above chips while high end chips are 30 and below.

The Chinese were able to introduce a sub 10 chip in their Huawei cell phone which was a major development. But, the chip itself was an old design they cloned that was originally built for Bitcoin mining.

The Chinese are falling farther and farther behind in chip manufacturing. They may produce lots of them, but they are the chips that allow you to start your dishwasher from the internet or get your margarita machine to sing La Cuca Racha when it reaches the correct consistency.

the rapid development of artificial intelligence (AI) capabilities.
Well, that’s not really happening, so….

shipments of AI chips
I’d like someone to point out to me what “AI chips” are. What is being used for AI are extremely high processing power video cards. There isn’t any such thing as a specific “AI chip”, insofar as I know.

If the above is true (there are not “AI chips”), is it reported this way because the gov’t people are idiots, or the journalists are idiots? Or both?

    Paul in reply to GWB. | October 6, 2023 at 12:40 pm

    You’re right that the same chips that do graphics-intensive processing are heavily used for a lot of AI tasks such as model training. But there are specialized ‘AI’ chips that have been developed to put some of the fundamental algorithm processing on the chip itself rather than further up the ‘software stack’ which can dramatically improve performance. Google’s ‘Tensor’ chip that they’re placing in their newer Pixel phones is a good example. Here is a marketing write-up:

Also, I love seeing Vietnam trying to get out from under the mistake of the 50s-70s. They realized at some point that maybe that communism thing was stupid and bad and they’d prefer to not be impoverished and a pariah.

Yes, there’s a lot of nuance in Vietnam, and there still are communists in government. But it’s nice to see someone figuring out “Hey, that was really dumb” in something less than 100 years.

If we put the squeeze on China over chips, that will make Taiwan even more likely to be invaded. They simply cannot survive without chips and this is akin to cutting off Japan’s oil supplies before WWII. China’s exports are its lifeblood and they cannot survive without them. They can retaliate by saying they will stop all pharmaceuticals shipped to the US. This is our fault for allowing capitalism to override common sense.