China Prohibits Nvidia's Artificial Intelligence Processors
The trade dispute between China and the United States has expanded to include TikTok and rare earth metals, but the latest development in the fraying relationship between the two tech giants is the focus on artificial intelligence (AI) chips.
China, which controls approximately 90% of the world's supply of rare earth metals, is advocating for the U.S. government to approve the sale of higher tech Blackwell chips to China. However, the Biden administration has enforced export restrictions on Nvidia chips sold to China, including the RTX Pro 6000D chip, a lower tech chip designed specifically for China.
The move by the Cyberspace Administration of China (CAC) has ordered top Chinese tech companies like Bytedance and Alibaba to end their testing and orders of Nvidia's RTX Pro 6000D chips. This decision comes after Chinese authorities started questioning and cautioning industry titans like Tencent over their purchases of Nvidia's H20 chips last month.
The Chinese chip industry has ramped up development after a ban on Nvidia chips earlier this year. Chinese companies like Alibaba and ByteDance have been instructed to focus on building a domestic system due to the geopolitical situation. In fact, Chinese tech executive stated that the industry is now focusing on building a domestic system.
The Chinese chip industry's efforts have shown promising results. Chinese companies like Alibaba and Baidu have experienced a boost in their shares after securing prominent Chinese customers for their new AI chips. Baidu's shares in Hong Kong jumped by the most they have in more than three years after analysts expressed confidence in the search engine operator's chip venture. Alibaba's shares rose after securing a prominent Chinese customer, state-owned telecommunications operator China Unicom, for its new AI chips.
Chinese chip stocks have experienced a major boom, with Beijing-based company Cambricon needing to warn investors. The restrictions were initially enforced due to national security and competitive fears, but the Chinese chip industry is now claiming that their chips are now comparable or even superior to Nvidia's under U.S. export controls.
The latest development in the trade dispute between China and the U.S. is a significant turning point in the tech industry. As China pushes for domestic AI chip production, the future of the relationship between Nvidia and Chinese tech companies remains uncertain. The industry will closely watch how the situation unfolds in the coming months.
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