US authorities have informed Advanced Micro Devices Inc. that the artificial intelligence chip designed for the Chinese market is too potent to be sold without a license, placing another American semiconductor company in the crosshairs of Washington's efforts to tighten controls on the export of advanced technologies.
AMD had sought approval from the Commerce Department to sell the AI processor in China on the basis that it operates at a lower performance level compared to what the company typically sells outside of China. However, individuals familiar with the situation, speaking on condition of anonymity, shared that US officials instructed AMD to acquire a license from Commerce's Bureau of Industry and Security before proceeding with any sales.
AMD has chosen not to comment on the matter, and it remains uncertain whether the company is pursuing a license at this time. The Bureau of Industry and Security has declined to provide any statements. As a result of these developments, AMD's shares fell by 2.2% during trading in New York on Tuesday.
In a similar vein, California-based rival Nvidia Corp. has also been modifying its high-powered AI chips intended for the Chinese market to comply with US regulations. These actions reflect Washington's efforts to limit China's access to cutting-edge semiconductors and AI technologies, citing national security concerns and the potential for Beijing to gain a military advantage.
Recent export controls imposed by President Joe Biden's administration have compelled semiconductor companies like AMD and Nvidia to adjust their strategies for selling AI chips to China. By implementing stricter regulations and monitoring intermediary nations, the US aims to restrict technological advancements that could benefit China's military capabilities.
Both Nvidia and AMD have faced challenges navigating these restrictions, with Nvidia redesigning its processors for China and Commerce Secretary Gina Raimondo reviewing these adaptations. While Nvidia has promptly responded by launching modified, lower-performing models, AMD's approach to developing new AI processors tailored for China remains undisclosed.
Despite initially downplaying the impact of export rules on its operations in China, AMD has intensified its focus on the AI chip market. In December, the company introduced the MI300 lineup, including the China-specific product dubbed MI309, positioning itself to compete with Nvidia's offerings. As discussions continue, it is essential for AMD to address customer considerations in China which could influence its decision to seek a license for future sales.
In response to the constraints on purchasing advanced AI chips from the US, prominent Chinese tech firms like Tencent Holdings Ltd. and Baidu Inc. have begun stockpiling Nvidia chips to sustain their AI projects. Simultaneously, Huawei Technologies Co. is advancing its own semiconductor development, potentially filling the gap created by the US restrictions and bolstering China's chipmaking capabilities in the future.
