Report: US Considers AI Chip Sanctions on Chinese Companies Abroad

Facts

• According to a Reuters report published Thursday, the US is considering including foreign subsidiaries of Chinese chip manufacturers on its Artificial Intelligence sanctions list after the US' previous round of curbs left a loophole that gave non-China-based subsidiaries access to advanced US chips.¹
• This follows the Commerce Department's decision last week to block China's access to advanced AI computing and semiconductor technology that it claims Beijing could use to model nuclear blasts, guide hypersonic weapons, establish networks for surveilling dissidents and minorities, and more.²
• According to experts, while the rule would make it illegal to ship US chips to mainland China, it will be difficult for Washington to police those transactions, since China-based employees legally access them remotely from foreign subsidiaries.³
• Besides military functions, the latest round of sanctions is believed to also impact other Chinese industries that rely on AI, including automated driving and gene sequencing, as well as AI company SenseTime and ByteDance – which owns TikTok.²
• Washington has already conducted such bans on a smaller scale, having ordered the companies Nvidia and AMD to restrict shipments of AI chips beyond China to other regions like the Middle East.³
• While the newest ban will expand to all companies, it is currently unclear how the US will stop China from accessing cloud providers like Amazon Web Services.⁴

Sources: ¹The Messenger, ²The New York Times, ³Reuters and ⁴Yahoo Finance.

Narratives

• Anti-China narrative, as provided by Foreign Affairs. The US' current system of blockades and sanctions has been quite successful, but Washington must push harder to exclude the most advanced chip technology from falling into Beijing's hands. As China inevitably grows its own chip manufacturing capabilities, the US should allow its Asian counterpart to produce older generations of chips while also working with the rest of the world to block it from accessing the components necessary for advanced chips. The US can't stop China, but it can remain one step ahead.
• Pro-China narrative, as provided by Global Times. As it works to wipe China off the tech economy map and monopolize the chip industry, the US is actually predicted to reduce its own companies' revenue and global market share by 37% and 18%, respectively. This, coupled with the loss of tens of thousands of American jobs, is what Washington is willing to induce as it plays tough-guy games with Beijing. If the US actually wanted to normalize relations, as it has said over and over again, it would stop treating China as an enemy.