![]() Clearly something was missing, and industry experts have been waiting for the other shoe to drop ever since. A policy like this would not make sense if that is the only step the administration planned to take. Rather, it shows how the policy as disclosed in September was incomplete. While the reasoning in this criticism is sound, it does not imply that the Biden administration’s actions are self-defeating. AI chip designers from selling their world-leading chips is actually good for China in the longer term because it will strengthen China’s domestic chip design ecosystem. In the short term, this policy will significantly harm Chinese AI data center companies.chip companies will now go to Chinese chip companies, offering a viable path to economies of scale and competitive performance. ![]() Because of the new export controls, revenues that formerly flowed to U.S.Chinese firms could not catch up to Nvidia and AMD on performance because they did not have enough customers to benefit from economies of scale and network effects.China’s domestic AI chip design companies could not win customers in China because their chip designs could not compete with Nvidia and AMD on performance.AI computer chip designers, such as Nvidia and AMD, from selling their high-end chips for AI and supercomputing to China. For weeks the Biden administration has been receiving criticism in many quarters for a new round of semiconductor export control restrictions, first disclosed on September 1. These new controls-a genuine landmark in U.S.-China relations-provide the complete picture after a partial disclosure in early September generated confusion. On October 7, 2022, the Biden administration announced a new export controls policy on artificial intelligence (AI) and semiconductor technologies to China. ![]()
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