The Biden Administration Considers Closing Loophole on Chinese Companies’ Access to AI Chips
The Biden administration is exploring the possibility of closing a loophole that allows Chinese companies to obtain American artificial intelligence (AI) chips through overseas units, according to sources familiar with the matter.
New Restrictions on AI Chip Shipments to China
The United States imposed restrictions on the export of AI chips and chipmaking tools to China last year, aiming to impede its military advancements. These rules are set to be strengthened soon, with the potential inclusion of measures to address the existing loophole.
In the initial round of restrictions, Chinese companies’ overseas subsidiaries were granted unrestricted access to the same semiconductors. This enabled the chips to be easily smuggled into China or accessed remotely by users based in China.
However, efforts are now underway to close this loophole, indicating the Biden administration’s determination to limit China’s access to top AI technology. The task of plugging every gap in export controls, however, proves to be challenging.
The Challenge of Policing Transactions
While it is illegal under U.S. law to send these AI chips directly to mainland China, enforcing this regulation proves to be difficult. China-based employees can legally access chips located at foreign subsidiaries, either remotely or through smuggling.
Experts acknowledge the challenge of determining the extent of this problem. “We don’t actually know how big a problem this is,” says Hanna Dohmen, a Research Analyst at Georgetown University’s Center for Security and Emerging Technology (CSET).
The Impact on China’s AI Capability
China heavily relies on U.S. chips to enhance its artificial intelligence capability, particularly in the development of unmanned combat systems. A report from George Washington University’s School of International Affairs reveals that nearly all AI chips procured via Chinese military tenders in 2020 were designed by U.S.-based companies.
The United States has been working on closing other loopholes that allow the entry of AI chips into China. For instance, in August, Nvidia and AMD were instructed to restrict shipments of AI chips to other regions beyond China.
Closing the Gap with Cloud Providers
One significant challenge is closing the loophole that allows Chinese parties to access U.S. cloud providers such as Amazon Web Services. The Biden administration is actively grappling with this issue, as Chinese individuals can legally access the same chips from anywhere in the world.
Timothy Fist, a fellow at the Center for a New American Security, highlights the absence of rules governing how these chips can be accessed by Chinese individuals.
In conclusion, the Biden administration is committed to addressing the loophole that allows Chinese companies access to American AI chips through overseas units. The challenge lies in enforcing restrictions on transactions and limiting China’s access to crucial AI technology.
