US lawmakers urge Biden administration to tighten AI chip export rules

After the rules took effect, Nvidia created special chips for China with lower interconnect speeds

SAN FRANCISCO (Reuters) - Two U.S. lawmakers who head a committee focused on China on Friday urged the Biden administration to tighten export restrictions on artificial intelligence chips in the wake of industry lobbying to leave the rules unchanged.

Representative Mike Gallagher, a Republican and chair of the House of Representatives select committee on China, and Representative Raja Krishnamoorthi, a Democrat and ranking member of the committee, in a letter to Commerce Secretary Gina Raimondo called to "further strengthen" a sweeping set of export control rules implemented last October that cut off China's access to top AI chips made by U.S. firms such as Nvidia (NVDA.O), Advanced Micro Devices (AMD.O) and Intel (INTC.O).

The letter urges U.S. officials to take an even stricter approach than one Reuters reported last month that they are considering.

The October 2022 rules impose two performance caps on exporting AI chips to China - one on how fast the chips can talk to one another, and the second on the chips' processing speeds.

After the rules took effect, Nvidia created special chips for China with lower interconnect speeds. Intel this month also said it has created an AI chip that can be sold in China.

But Nvidia's chips still have high enough processing speeds to be useful in creating AI systems, and Reuters reported in May that the U.S. export controls have done little to slow the progress of China's AI sector.

Last month, Reuters reported that U.S. officials were considering tightening the rules by focusing on processing speeds alone, which could affect Nvidia's chips. Nvidia at the time said that restricting sales of its AI chips to China "would result in a permanent loss of opportunities for the U.S. industry."

The potential tightening of the rules set off a flurry of lobbying activity, with the chief executives of Nvidia, Intel and Qualcomm traveling to Washington last week to meet with administration officials to discuss China policy. The same day as the visit, the Semiconductor Industry Association, a U.S.-based industry group, urged the Biden administration to allow the "the industry to have continued access to the China market, the world’s largest commercial market for commodity semiconductors."

On Friday, Gallagher and Krishnamoorthi urged an even tighter approach than the one Reuters previously reported officials are considering. The lawmakers' letter recommended keeping a speed limit on how fast chips can talk to one another and said it "should be lowered sufficiently to prevent clever engineering that bypasses the regulations."

The lawmakers also urged administration officials to "closely consider" how to cut off Chinese firms' access to advanced computing chips in the cloud, where major U.S. firms such as Amazon.com (AMZN.O), Microsoft (MSFT.O) and Alphabet's (GOOGL.O) Google offer the chips for rent as part of their cloud computing services.

"We urge you to even further strengthen the October 7, 2022, rules so that advanced U.S. technology and expertise related to advanced computing and semiconductors are not used against the United States," Gallagher and Krishnamoorthi wrote.