In a move aimed at maintaining dominance in the field of artificial intelligence (AI) and addressing concerns about potential military applications, the United States is reportedly considering implementing new restrictions on the export of AI chips to China. According to a report from the Wall Street Journal, the US Commerce Department may halt shipments of chips made by Nvidia, Advanced Micro Devices (AMD), and other chip companies to customers in China as early as July.

The proposed restrictions have caused a decline in share prices for major chip manufacturers. Following the news, shares of Nvidia (NVDA.O) dropped more than 2%, while Advanced Micro Devices (AMD.O) experienced a decline of approximately 1.5% in extended trading.

The deliberations within the US government highlight the White House’s concerns about potential technological advancements made by China in the AI field and the subsequent implications for national security. By tightening trade restrictions, the US aims to maintain its lead in AI technology and prevent Beijing from leveraging it for military purposes.

Nvidia, Micron, and AMD find themselves caught in the crossfire between China and the Biden administration as tensions continue to rise. Last September, Nvidia received a request from US officials to cease exporting two top computing chips specifically designed for AI work to China. In response, the company introduced the A800 chip in China to adhere to export control regulations. Additionally, Nvidia modified its flagship H100 chip earlier this year to comply with the evolving regulatory landscape.

However, the new restrictions being considered by the US Commerce Department would go even further, potentially banning the sale of A800 chips without a special US export license. If implemented, these restrictions could significantly impact the operations and revenue of chip manufacturers operating in both the US and Chinese markets.

The ongoing trade tensions between the two nations continue to pose challenges for companies operating within the semiconductor industry. As geopolitical concerns persist, industry stakeholders are closely monitoring developments and preparing for potential disruptions in the global supply chain.

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