The American chip industry could face significant long-term costs if new restrictions on the sale of artificial intelligence (AI) semiconductors to China are implemented, Nvidia Inc. (NASDAQ:NVDA) warns. These potential export controls could also exacerbate tensions between the U.S. and China, The Wall Street Journal reports.
Export Controls and Impact
The proposed export controls would require chip makers like Nvidia to obtain a license before shipping chips used to create powerful AI systems to China.
“Over the long term, restrictions prohibiting the sale of our [AI chips] to China will result in a permanent loss of opportunities for the U.S. industry to compete and lead in one of the world’s largest markets,” said Colette Kress, Nvidia’s chief financial officer, according to the Journal.
Political Tensions
The Biden administration’s push for further export controls is driven by concerns about China’s potential use of AI in hacking, espionage, and military applications. The new action could heighten the tensions between the U.S. and China, even as Washington has taken steps to stabilize bilateral relations in recent weeks. Beijing is caught between pushing back on U.S. efforts to deny China critical technologies and the need to bolster foreign business confidence to shore up the Chinese economy, analysts note.
Industry Response
Chip makers, including Intel Inc. (NASDAQ:INTC) and Nvidia, are lobbying the administration to ease any new restrictions or drop them altogether. The timing of any potential ban on AI chip exports is still uncertain.
Price Action
Nvidia shares traded 1.2% higher at $416.13 in the premarket session on Thursday.
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