New US Chip Sanctions ‘Kneecap’ China’s Tech Industry

Last month, the Chinese ecommerce giant Alibaba revealed a powerful new cloud computing system designed for artificial intelligence projects. It is used by Alibaba’s cloud customers to train algorithms for tasks like chatbot dialogue and video analysis, and was built using hundreds of chips from US companies Intel and Nvidia.

Last week, the US announced new export restrictions that will make future projects like that unlikely. The Biden administration’s rules forbid companies from exporting advanced chips needed to train or run the most powerful AI algorithms to China.

The sweeping new controls are designed to keep the country’s AI industry stuck in the dark ages while the US and other Western countries advance. The restrictions also block the export of chipmaking equipment and design software, and ban the world’s leading silicon fabs, including Taiwan’s TSMC and South Korea’s Samsung, from manufacturing advanced chips for Chinese companies.

“The United States is saying to China, ‘AI technology is the future; we and our allies are going there—and you can’t come,’” says Gregory Allen, director of the AI governance project at the Center for Strategic & International Studies (CSIS), a think tank in Washington, DC.

Chris Miller, a professor at Tufts University and author of the recent book Chip War: The Fight for the World’s Most Critical Technology, says the new export blockade is unlike anything seen since the Cold War. “The logic is throwing sand in the gears,” Miller says.

The US action takes advantage of a decade-long boom in artificial intelligence in which new breakthroughs have become coupled to advances in computing power. Pioneering new projects often involve machine learning algorithms trained on supercomputers with hundreds or thousands of graphics processing units (GPUs), chips originally designed for gaming but also ideal for running the necessary mathematical operations. That leaves China’s AI ambitions heavily dependent on US silicon.

Baidu, the leading Chinese web search provider and a key player in cloud AI services and autonomous driving, also uses Nvidia chips extensively in its data centers. Last October the company announced one of the world’s largest AI models for generating language, built using Nvidia hardware.

ByteDance, the Chinese company behind TikTok and its counterpart in China, Douyin, relies on Nvidia hardware to train its recommendation algorithms, according to its own software documentation. Several Chinese companies, including Alibaba and Baidu, are developing silicon chips designed to compete with those from Nvidia and AMD, but these all require manufacturing from outside China that is now off-limits. Alibaba and Baidu both declined to comment on the new rules. WIRED did not receive responses to requests for comment made to ByteDance and several other Chinese chip firms.

Big Tech companies in China—as in the US—have made large AI models increasingly central to applications including web search, product recommendation, translating and parsing language, image and video recognition, and autonomous driving. The same AI advances are expected to transform military technology in the years to come, and shape how the US and China butt heads over issues like Russia’s invasion of Ukraine and Taiwan’s claims to independence.