In an effort to curb the rapid growth of artificial intelligence in China, the Biden administration has begun imposing tougher sanctions. The latest development isNVIDIA microsoft to bypass sanctionsChina's tailor-made H800 and A800 GPUs are also banned.Before we get into that, let’s take a look at what exactly drove the U.S. government to take such action. With the global influx of artificial intelligence developments, Chinese companies such as Alibaba are leading the way in integrating genAI into mainstream applications.
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This has paved the way for artificial intelligence to enter multiple industries in China, resulting in a huge demand for necessary equipment to meet the needs of the industry. There are reports that China's artificial intelligence server market may exceed the US$16 billion mark in just four years. Such indicators make the United States uneasy and believe that the "national balance" has been broken.
CNBC reported that the United States has officially taken measures to hinder the development of artificial intelligence in China and cut off the supply of artificial intelligence GPUs, a necessary component. U.S. Commerce Secretary Gina Raimondo said that the sanctions are intended to prevent China from achieving "military" growth through the application of artificial intelligence, and that the actions taken are in no way targeting the "Chinese economy." Here are the official’s words:
These policy updates, specifically designed to control access to computing capabilities, will significantly slow down China’s development of next-generation cutting-edge models and could be exploited in ways that threaten the United States and our allies, particularly as they could be used for modern military purposes.
-Secretary of Commerce Gina Raimondo
How much impact will this step have on China's artificial intelligence market? It's too early to ask the question, but reports suggest that China will be banned from using NVIDIA's H800 and A800, which are already stripped-down versions of NVIDIA's previously developed products to comply with U.S. trade policies. Since access to the high-end H100 has long been suspended, changes in U.S. policy will obviously hinder the development of China's artificial intelligence market.
"As we comply with all applicable regulations while working hard to deliver products that support thousands of applications across many different industries, we do not expect a meaningful impact on our financial results in the near term given the global demand for our products."
-NVIDIA representative interviewed by CNBC
While the official response has been downplayed, the impact of the ban on suppliers like NVIDIA, which accounts for a major share of China's GPU demand, is certainly something to worry about. Nvidia officials have expressed concern that such sanctions would have a "long-term" impact on revenue figures and relations with the country. However, this ultimately leads to “loopholes” as supply constraints on a product always have its impact, especially if demand is high.