According to Allen of CSIS, the Biden administration believes in the hype around the potential of artificial intelligence in military applications. The United States has a good understanding of which computer chips are going into Chinese military artificial intelligence systems and which ones are American, which is seen as unacceptable.
Despite decades of technological codependence, Chinese manufacturing has become the bedrock of the US tech industry. Due to an increased sense of competition with China, the US government has taken a more active role in boosting its domestic artificial intelligence and chip production.
The scope of the restrictions sank in with investors and caused the shares in several Chinese tech firms to fall. Last month, the Department of Commerce warned the two companies that they would have to stop exporting their chips to China. The new export rules add to a rough 18 months for China's tech firms, which have been hit by a government campaign to regulate the industry more tightly.
Chinese projects could be slowed by being cut off from US technology. China's leading domestic chipmaker, Semiconductor Manufacturing International Corporation (SMIC), produces chips that lag several generations behind the others. The 14-nanometer generation of chip making processes refers to how densely components can be packed onto a chip. The two companies have moved to 5- and 3-nanometer processes. SMIC claims to be able to produce 7-nanometer chips.
The inability of a Chinese company to keep up with advances in chip manufacturing is due to its lack of access to the extreme ultraviolet lithography machines needed to make chips with components smaller than those of the 7-nanometer generation The US government requested that ASML stop exporting to China.
One from the 5-nanometer generation of technology is three times faster or more efficient than a 14-nanometer one, according to the executive director of the nonprofit that benchmarks the performance of artificial intelligence chips.
China's artificial intelligence industry won't be cut off immediately. A person at a Chinese venture capital fund that specializes in artificial intelligence, who spoke anonymity because of the sensitive nature of the topic, said that some Chinese companies have been taking advantage of the new rule change to increase their production of graphics processing units. It could be possible for companies to train their models outside of China.
The CEO of a Chinese AI startup, who also spoke on condition of anonymity, said the new restrictions would slow down advances at Chinese companies in the long run, but that they could keep up with the US in the short term by running older hardware. The amount of data can be more useful than the power of the computer. Training artificial intelligence models does not need a lot of power.
How the rules are enforced is the most important question at the moment. In the short term, I think this will do what it's intended to do, and that's cap the high performance computing efforts of China. China will look to other countries with chipmaking expertise to try to get components in.
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