U.S. Considers AI Chip Restrictions for Malaysia and Thailand to Close Trade Loopholes Sending Chips to China

The U. S.Commerce Department is exploring strategies to halt the export of artificial intelligence (AI) chips to China via Southeast Asian nations, with plans to integrate these measures into the upcoming “AI Diffusion”policy.

New Restrictions Aimed at Curbing High-End AI Chip Exports to China

The export of NVIDIA’s advanced AI chips to China poses significant challenges for U. S.authorities. Despite implementing several rounds of export controls, the government has struggled to prevent Beijing from acquiring high-performance accelerators. While direct shipments to China have diminished, local AI enterprises have identified various loopholes, including rental of GPUs and sourcing them through nations such as Malaysia. Recent reports from Bloomberg indicate that the Commerce Department is committed to closing these gaps.

The Commerce Department is reportedly drafting regulations that would restrict China’s access to AI chips through backdoor routes in Malaysia and Thailand. While the details are still being finalized, there is potential for new export limits affecting both countries. However, uncertainty remains around the specific scope of these controls, considering major tech companies like Oracle operate data centers in the region. One primary suggestion includes allowing chip exports to Malaysia and Thailand solely for companies headquartered in the U. S.that maintain relevant subsidiaries in those countries.

The Biden administration is currently refining the details of the “AI Diffusion”policy as it relates to export controls. Commerce Secretary Howard Lutnick has provided insight into the foundational principles guiding the U. S.’s approach:

The US will allow our allies to buy AI chips, provided they’re run by an approved American data center operator, and the cloud that touches that data center is an approved American operator.

As NVIDIA navigates these complex regulations, the company is reportedly uncertain about how the Trump administration’s policies regarding AI would be established. Nevertheless, NVIDIA has experienced a pronounced decline in business operations within China. Meanwhile, alternatives to AI chips, such as Huawei’s Ascend, are rapidly gaining traction in the market, signifying a swift shift in the global AI landscape. Observing how this geopolitical tug-of-war unfolds will be crucial for both the U. S.and China in the coming months.

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