The United States has lifted the ban on the export of AI chips to China, but under the condition that companies like Nvidia and AMD will have to give 15 percent of the profits from sales in China to the U.S. government. This step has been taken keeping in mind the security concerns of the U.S. to prevent China's military technology development. Following this deal, Nvidia is expected to get some relief from the billions of dollars in losses incurred at the beginning of the year.
AI Chip Export: The United States has accepted the proposal to remove the restriction on the export of Artificial Intelligence (AI) chips to China, on the condition that major chip manufacturing companies like Nvidia and AMD give 15 percent of their profits from sales in China to the U.S. government. This decision falls under the export control rules imposed by the Biden administration in October 2022, which aimed to limit China's access to advanced technology. This agreement will allow Nvidia and AMD to resume selling their AI chips in China, thereby reducing their financial losses.
Export Ban and Economic Losses
In October 2022, the United States imposed a ban on the export of advanced AI and semiconductor chips to China. The aim was to prevent China's military and technological strength from increasing. In particular, AI chips are used in the development of military technology and autonomous weapons. For this reason, the U.S. restricted the sale of Nvidia's H100 and A100 GPU chips in China. Due to this restriction, Nvidia suffered a significant loss of about $5.5 billion at the beginning of the year.
Nvidia and AMD's Conditions and U.S. Administration's Agreement
Nvidia's CEO, Jensen Huang, spoke with the U.S. administration to mitigate this financial crisis. He also met with former U.S. President Donald Trump on Wednesday. Following this, Nvidia and AMD agreed to give 15 percent of the profits from the sale of AI chips in China to the U.S. government, while complying with U.S. regulations. Nvidia's H20 chip and AMD's MI308 chip fall under this agreement.
Efforts to Balance Security with Economic Interests
The Biden administration imposed this export control to curb China's military capabilities. The U.S. feared that China could increase its military power through these AI chips. However, this restriction caused American companies billions of dollars in losses, which was also not good for the American economy. Through this new agreement, the United States has tried to strike a balance between security and economic considerations.
Impact of America's New Policy
This new policy will help the U.S. maintain its technology engagement in China, while also giving China the opportunity to continue using advanced AI chips. Nvidia stated that it is fully complying with the rules made by the U.S. and is trying to balance its market around the world.
