U.S. Blocks AMD AI Chip for China, Citing Security Risks

AMD AI Chip: The U.S. government has rejected Advanced Micro Devices Inc’s (NASDAQ: AMD) bid to sell a specially designed artificial intelligence (AI) chip to China, Bloomberg reported on Tuesday.

The chipmaker had hoped to get clearance from the U.S. Commerce Department to export the AI processor, which had lower performance than its global products, to the Chinese market. The chip was intended to comply with the U.S. export restrictions on advanced technologies to China, according to the report.

However, U.S. officials said the chip was still too powerful and posed a security risk, as it could be used by China for military purposes. They told AMD that it needed to obtain a license from the Commerce’s Bureau of Industry and Security (BIS) to sell the chip in China, the report said.

AMD AI Chip Faces U.S. Export Curbs on AI Technology

AMD and the Commerce Department did not immediately respond to Reuters’ request for comment.

The U.S. has been tightening its control over the export of key AI-related technology to China, as part of its efforts to curb Beijing’s access to cutting-edge technology that could boost its military capabilities.

In 2022, President Joe Biden introduced a series of measures to prevent China from using AI in military applications, such as facial recognition, surveillance, and autonomous weapons. The measures included adding more Chinese companies to the U.S. Entity List, which restricts their ability to buy U.S. technology without a license.

In 2023, the U.S. also announced plans to halt shipments to China of more advanced AMD AI chips designed by Nvidia Corporation (NASDAQ: NVDA) and other companies, as part of a broader strategy to stop Beijing from receiving the latest U.S. technologies to strengthen its military.

AMD Seeks to Expand its Presence in China

AMD, which is known for its high-performance computing and gaming chips, has been trying to expand its presence in the Chinese market, which is the world’s second-largest economy and a major consumer of AI technology.

The chipmaker has been collaborating with Chinese partners, such as Tianjin Haiguang Advanced Technology Investment Co Ltd (THATIC), to develop and sell server chips for the Chinese market. The joint venture, which was formed in 2016, has been exempted from the U.S. export restrictions, as it uses older technology that is not considered a security threat.

AMD has also been competing with Nvidia, the leader in the AMd AI chip market, to win over Chinese customers, such as Tencent Holdings Ltd (HK:0700) and Baidu Inc (NASDAQ: BIDU), which are among the world’s largest AI developers and users.

However, AMD’s efforts to sell its AMD AI chip to China have faced a setback, as the U.S. government has blocked its request, citing security risks. The decision could limit AMD’s growth potential in the Chinese market, as well as its ability to compete with Nvidia and other rivals.

Impact of US Export Controls on Semiconductor Sales to China

According to anonymous sources, AMD had hoped to receive approval from the Commerce Department to sell their AI processor to Chinese customers. However, it seems that the chip’s performance was still considered too powerful by US officials. As a result, AMD was informed that they would need to obtain a license from the Bureau of Industry and Security to proceed with the sale. At this time, it is unclear whether AMD will be applying for the license.

The United States has been implementing measures to restrict Chinese access to advanced semiconductors and the manufacturing tools used to create them. This is due to concerns that Beijing could gain a military advantage. President Joe Biden’s administration introduced export controls in 2022, and these restrictions were further strengthened in October of the same year to include more technology and limit sales to intermediary nations that could undermine the ban.

These tighter controls affected the sale of a processor specifically designed for China by leading AI chipmaker Nvidia Corp. However, Nvidia has since developed new, customized products with lower power capabilities to comply with the 2023 restrictions. Commerce Secretary Gina Raimondo has expressed interest in examining the details of these components.

Both Nvidia and AMD were unable to sell their most powerful AMD AI chips to China due to the 2022 ban, prompting them to seek alternative solutions. Nvidia quickly responded by offering a modified model with reduced performance. On the other hand, AMD has not publicly discussed its efforts to develop a new AI processor for the Chinese market.

While Nvidia had a significant presence in the Chinese AMD AI chip industry, AMD had a smaller foothold in comparison.