AI chip bans cloud US-China trade talks

Top Chinese and United States economic officials may meet in Beijing in early July but the potential meeting is now clouded by chip ban threats from both sides. Treasury Secretary Janet Yellen said in a TV interview on Wednesday that she hopes to visit China and re-establish contact with new leaders despite differences between Beijing and Washington. As of Thursday night, Beijing had not yet confirmed Yellen’s trip. China’s May sanctions against Micron have not helped smooth the fraught relationship. Meanwhile, the US is mulling strengthening of its export bans to prevent China from using its AI chips to make weapons or abuse human rights, media reported. Nvidia, a graphic processing chip (GPU) maker, will not be able to ship its A800 and H800 artificial intelligence (AI) chips to China if the US tightens its export controls, the reports said. The company tailor-made the two products for the Chinese markets after it was banned by the US government from exporting its A100 and H100 chips to China last August. The decision will probably be announced after Yellen’s visit to Beijing, according to the Wall Street Journal. Chinese commentators said it’s ridiculous that the US is strengthening its sanctions against China while seeking to hold talks in Beijing. They said China should consider further penalizing US memory chipmaker Micron Technology. “China and the US are in touch about dialogue and exchange at various levels,” Mao Ning, a spokesperson of the Chinese Foreign Ministry, said in a regular media briefing on Thursday when being asked about Yellen’s China trip. At the same time, Mao criticised US Secretary of State Antony Blinken – who visited Beijing on June 18-19 – for smearing China in a recent speech. “We are dissatisfied with Blinken’s remarks. Out of a wrong perception of China, the US pursues a wrong policy toward China by containing and suppressing it, discrediting it for no reason and wantonly interfering in its internal affairs,” Mao said. “The words and actions of the US side violate the basic norms governing international relations. Of course, China firmly opposes them.” She said the US should stop making irresponsible remarks and take concrete actions to honor the promises it made. In a review of his recent trip to Beijing, Blinken told CBS on Wednesday that both the US and China have obligations to manage their bilateral relationship responsibly and make sure that their profound differences don’t veer into conflict. “One of the things that I said to my Chinese counterparts during this trip was that we are going to continue to do things, and say things that you don’t like, just as you’re no doubt going to continue to do and say things that we don’t like,” he said. Investment curbs Since US media reported in April that US President Joe Biden was set to sign an executive order that would restrict US funds from investing in China’s high technology sector, Beijing has shown more willingness to communicate with Washington. Biden originally planned to announce the investment curbs before Japan hosted the G7 Summit on May 19-21. However, he did not do so. Nikkei reported on June 10 that the White House is still trying to get key allies on board and navigate domestic pushback in Congress and on Wall Street. On Monday, Bloomberg reported that Yellen is planning to visit Beijing in early July and seeking to meet Chinese Vice Premier He Lifeng, who assumed his position in March. It said the Biden administration’s investment curbs are nearing completion and will be ready as soon as late July. In early July, the US Commerce Department will announce its decision to halt chip exports “by Nvidia and other chipmakers to customers in China and other countries of concern without first obtaining a license,” according to the Wall Street Journal. Gao Lingyun, a researcher at the Institute of world economics and politics, Chinese Academy of Social Sciences, told the Global Times that the potential expansion of chip export bans will hurt the interests of US chipmakers, which have been selling about 30% of their products to the Chinese markets. Gao said Yellen, who has a fair understanding of Sino-US economic and trade relations, is supposed to persuade China to buy more US national debt during her trip but it’s regretful that she has been caught by broadsides from anti-China hawks in Washington. Colette Kress, chief financial officer of Nvidia, said Wednesday that the company is aware that it may be restricted from shipping A800 and H800 chips to China. “Over the long term, restrictions prohibiting the sale of our data center GPUs to China, if implemented, would result in a permanent loss of opportunities for the US industry to compete and lead in one of the world’s largest markets and impact on our future business and financial results,” she said. Nvidia’s shares closed down 1.8% at US$411.17. The shares have gained 187% so far this year as the company decided t

AI chip bans cloud US-China trade talks

Top Chinese and United States economic officials may meet in Beijing in early July but the potential meeting is now clouded by chip ban threats from both sides.

Treasury Secretary Janet Yellen said in a TV interview on Wednesday that she hopes to visit China and re-establish contact with new leaders despite differences between Beijing and Washington. As of Thursday night, Beijing had not yet confirmed Yellen’s trip.

China’s May sanctions against Micron have not helped smooth the fraught relationship.

Meanwhile, the US is mulling strengthening of its export bans to prevent China from using its AI chips to make weapons or abuse human rights, media reported.

Nvidia, a graphic processing chip (GPU) maker, will not be able to ship its A800 and H800 artificial intelligence (AI) chips to China if the US tightens its export controls, the reports said. The company tailor-made the two products for the Chinese markets after it was banned by the US government from exporting its A100 and H100 chips to China last August.

The decision will probably be announced after Yellen’s visit to Beijing, according to the Wall Street Journal.

Chinese commentators said it’s ridiculous that the US is strengthening its sanctions against China while seeking to hold talks in Beijing. They said China should consider further penalizing US memory chipmaker Micron Technology.

“China and the US are in touch about dialogue and exchange at various levels,” Mao Ning, a spokesperson of the Chinese Foreign Ministry, said in a regular media briefing on Thursday when being asked about Yellen’s China trip.

At the same time, Mao criticised US Secretary of State Antony Blinken – who visited Beijing on June 18-19 – for smearing China in a recent speech.

“We are dissatisfied with Blinken’s remarks. Out of a wrong perception of China, the US pursues a wrong policy toward China by containing and suppressing it, discrediting it for no reason and wantonly interfering in its internal affairs,” Mao said. “The words and actions of the US side violate the basic norms governing international relations. Of course, China firmly opposes them.”

She said the US should stop making irresponsible remarks and take concrete actions to honor the promises it made.

In a review of his recent trip to Beijing, Blinken told CBS on Wednesday that both the US and China have obligations to manage their bilateral relationship responsibly and make sure that their profound differences don’t veer into conflict.

“One of the things that I said to my Chinese counterparts during this trip was that we are going to continue to do things, and say things that you don’t like, just as you’re no doubt going to continue to do and say things that we don’t like,” he said.

Investment curbs

Since US media reported in April that US President Joe Biden was set to sign an executive order that would restrict US funds from investing in China’s high technology sector, Beijing has shown more willingness to communicate with Washington.

Biden originally planned to announce the investment curbs before Japan hosted the G7 Summit on May 19-21. However, he did not do so. Nikkei reported on June 10 that the White House is still trying to get key allies on board and navigate domestic pushback in Congress and on Wall Street.

On Monday, Bloomberg reported that Yellen is planning to visit Beijing in early July and seeking to meet Chinese Vice Premier He Lifeng, who assumed his position in March. It said the Biden administration’s investment curbs are nearing completion and will be ready as soon as late July.

In early July, the US Commerce Department will announce its decision to halt chip exports “by Nvidia and other chipmakers to customers in China and other countries of concern without first obtaining a license,” according to the Wall Street Journal.

Gao Lingyun, a researcher at the Institute of world economics and politics, Chinese Academy of Social Sciences, told the Global Times that the potential expansion of chip export bans will hurt the interests of US chipmakers, which have been selling about 30% of their products to the Chinese markets.

Gao said Yellen, who has a fair understanding of Sino-US economic and trade relations, is supposed to persuade China to buy more US national debt during her trip but it’s regretful that she has been caught by broadsides from anti-China hawks in Washington.

Colette Kress, chief financial officer of Nvidia, said Wednesday that the company is aware that it may be restricted from shipping A800 and H800 chips to China.
 
“Over the long term, restrictions prohibiting the sale of our data center GPUs to China, if implemented, would result in a permanent loss of opportunities for the US industry to compete and lead in one of the world’s largest markets and impact on our future business and financial results,” she said.
 
Nvidia’s shares closed down 1.8% at US$411.17. The shares have gained 187% so far this year as the company decided to invest in AI technology. Last month, Nvidia said it will build one of the world’s fastest AI cloud supercomputers in Israel and also an AI research center in Taiwan to accelerate its Omniverse project, a computing platform that supports 3D applications.

Good cop, bad cop

A meeting between Chinese President Xi Jinping and Blinken on June 19 has eased the political tensions between China and the US but failed to stop Washington from unveiling more curbs.
 
Blinken said in a media briefing after the meeting that the US government will continue to prevent its technologies from being used against the American people – for example, in making hypersonic weapons, or in human rights abuses in China. He said more US officials would visit China in the following weeks.

A Shanxi-based columnist on Wednesday published an article with the title, “Yellen wants to visit China but Biden is busily preparing sanctions. Can the US show some sincerity?” 

“Undeniably, the US government’s moves are ridiculous,” the writer says. “The US threatens to impose more curbs in an attempt to force China to compromise in talks. This is an old trick, the same as what it did before Blinken’s China trip.”

“The US Treasury Department is playing good cop while the Commerce Department is playing bad cop. No matter what, they are pushing forward the so-called America First strategy,” he says.

He says Beijing must stay vigilant towards the coming actions of the US, which has so far remained hostile against China.

“Last month China forbade its key infrastructure operators to purchase products from Micron. If the Biden administration imposes new chip export bans on China, will the China side launch countermeasures?” Ren Chiming, a host of Phoenix TV, says in a video on Wednesday. “It’s likely that the chip war between China and the US will continue to intensify.”

Shortly after the G7 Summit ended on May 21, the Cybersecurity Review Office, a unit of the Cyberspace Administration of China, sanctioned Micron for posing network security risk. Chinese media criticized Micron for having downsized its production in China in recent years.

On June 16, Micron said it would invest 4.3 billion yuan (US$603 million) in its chip packaging facility in Xian over the coming few years. The investment is to include buying equipment from a unit of Taiwan’s Powertech Technology. 

Read: China, US resume talks but ‘de-risking’ lingers

Follow Jeff Pao on Twitter at @jeffpao3