Local companies are overcoming the US sanctions to limit China’s access to American chip technology by developing homegrown AI.
The race towards popular AI is gaining pace in China as local companies endeavor to develop homegrown AI. The Chinese companies are breaking the reliance on US-manufactured chips. The move is attributed to US sanctions imposed by Joe Biden’s administration in 2022.
Chinese Manufacturers Defy US-Fed Allegation of Impossibility to Produce Homegrown AI
In a report published by the Wall Street Journal, several Chinese companies are executing AI trials using weaker semiconductors. Besides, the companies are utilizing multiple chips to bypass the reliance on specific hardware.
The report dismisses the allegation by US researchers that attaining alternatives to sourcing chips for Chinese tech firms is impossible. Instead, recent experiments indicate the possibility.
The move by the US to prohibit the sale of chips to Chinese companies is depriving Asian manufacturers of access to advanced chips. As such, the Chinese cannot access Nvidia’s A100 chips and upgraded H100 versions. It denies them access to the most preferred options among the AI developers.
A scrutiny of the Chinese tech sector reveals that manufacturers can only access the Nvidia A800 and H800 chips. Both have mild performance, thus restricting their utilization to small-scale AI models.
The emergence of homegrown AI is timely given that China’s leading e-commerce platform, Alibaba, revealed plans to launch a ChatGPT rival in April. The Chinese giant is set to roll out Tongyi Qianwen. Alibaba seeks to integrate the new product with its chatbot, creating a web of integrated application suites featuring workplace messenger DingTalk.
ChatGPT has emerged as dominant in the AI segment since its release by OpenAI. Other developers have admitted to initiating processes to create superior AI systems, particularly among Us companies.
Microsoft recently revealed the development of multiple AI-powered features and applications to improve the pre-existing chatbot Bing. Also, the AI-powered features will advance the Edge browser. Also, DeepMind, the AI unit of Google, initiated restructuring in an attempt to deliver AI breakthroughs.
Mandatory Scrutiny of AI-Generative Services
The increased activity regarding AI triggered concerns among the Chinese authorities. This prompted the imposition of mandatory scrutiny of all AI-related generative services. The scrutiny is compulsory before their approval for public utilization.
China’s retreat to homegrown AI is a response to the sweeping sanctions issued by Biden’s administration on October 7. The sanction placed export controls cutting off Chinese manufacturers from accessing American semiconductor chips alongside other chip-making equipment.
Unless approved, the rules directed US companies to halt supply to Chinese chipmakers capable of producing advanced chips.
The new directive limited supply of semiconductor production input. Also affected were transactions involving end-users in integrated circuits.
Whitehouse harbors plans to expand the scope of export controls to feature software, technology, and semiconductor items capable of facilitating integrated circuit development. Also targeted is banning green-card holders from ever working for Chinese entities involved in the above technology.
Products Restricted by the Ban
The export ban denies Chinese firms access to Intel’s GPU, Ponte Vecchio series, and NVIDIA’s A/H100.
Brady Wang from Hong Kong-based Counterpoint revealed that the October 2022 ban was built upon the existing restrictions previously conveyed by toolmakers.
The letters directed KlA, Applied Materials, and Lam Research to desist from shipping equipment to the wholly-owned Chinese factories producing advanced logic equipment and chips.
The US Department of Commerce admitted that the export controls seek to starve Chinese-owned factories with the inability to access advanced computing chips and the capability to maintain supercomputers.
The Extent of Chip Ban?
Tech analyst Bill Bishop considers the chip ban underscoring a massive escalation of the US-China trade war and geopolitical tensions.
Bishop revealed in his analytical publication in the Sinocism newsletter that the Biden administration is unaware of how the restrictions impact tech supply chains and US-China relations.
Josep Bori, the head of thematic research at GlobalData, considers the US sanctions as efforts to control the world economy and sustain artificial intelligence dominance. He adds that AI is today’s fifth industrial revolution that will influence global economic leadership in the subsequent decades.
China Compelled to Use Locally Made Chips
China is the dominant destination for semiconductors sold globally. It accounts for over three-quarters of the global semiconductors’ sales. Considering it only produces 15% of the global output, it is unsurprising for local companies to resort to homegrown AI.
The decision to ban chip exports to Chinese-owned factories is bound to affect several semiconductor manufacturers within Asia. Market leaders such as Taiwanese-based TSMC, Samsung, and SK Hynix are also facing threats.
Clifford Kurz from S&P Global Ratings admitted that the market leaders have the financial strength to absorb the restrictions for a year. Beyond that, declined access to the chips would erode their rating.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.