AMD faces a US roadblock selling AI chips to China despite the lower performance to comply with rules. (Photo by PAU BARRENA/AFP).

AMD faces a US roadblock selling AI chips to China despite the lower performance to comply with rules.(Photo by PAU BARRENA/AFP).

AMD’s Chinese AI chip plan halted by US govt: What’s next?

  • AMD faces a US roadblock selling AI chips to China despite the lower performance to comply with rules.
  • US officials say the chips are too powerful, and AMD needs a license to sell them.
  • How much further can the US push chipmakers without declaring outright trade war?

In a twist of events, Advanced Micro Devices Inc (AMD) finds itself at a standstill as it faces hurdles from the US government in its endeavor to sell AI chips explicitly tailored for the Chinese market. This roadblock, part of Washington’s broader crackdown on exporting advanced technologies to China, sheds light on the intricate interplay between global trade dynamics and national security concerns.

AMD’s aspiration to secure approval from the US Commerce Department to sell the AI processor to Chinese customers has hit a snag. The chip in question, the MI309, is designed to cater specifically to the demands of the Chinese market, representing AMD’s ambitious foray to capture the attention of Chinese consumers and businesses alike.

Despite designing the chip with lower performance metrics to comply with US export restrictions, officials have still deemed it too powerful. Consequently, AMD finds itself in a quandary, with US authorities mandating the acquisition of a license from the Commerce Department’s Bureau of Industry and Security before the sale can go ahead.

“AMD had hoped to gain a green light from the Commerce Department to sell the AI processor to Chinese customers since it performs at a lower level than what the company sells outside of China,” Bloomberg reported

The MI309 and its hurdles

One of the pivotal moments in AMD’s journey came with the realization that its presence in China’s AI chip sector lagged behind that of its competitors, most notably Nvidia. In response, AMD intensified its efforts to capture market share and establish itself as a formidable contender in China’s burgeoning AI chip market. But the path forward was uncertain as regulatory scrutiny and export restrictions loomed.

Despite the daunting challenges, AMD pressed forward, unveiling its latest innovation, the Instinct MI309 chip, tailored specifically for the Chinese market. With its advanced features and tailored design, the MI309 chip represented a bold step forward for AMD, signaling its commitment to innovation and growth in adversity. However, the journey was far from smooth sailing, as the MI309 chip encountered regulatory hurdles and faced scrutiny from US authorities.

What will AMD do about its AI chip hurdles?

While AMD remains tight-lipped about its next steps, the Bureau of Industry and Security too has refrained from commenting on the matter, leaving the situation uncertain. The ambiguity surrounding AMD’s potential course of action has naturally fueled speculation about its future trajectory and ability to navigate the intricate web of regulatory frameworks.

AMD received licenses from the Commerce Department last August to sell its advanced AI chips, including its flagship MI250 data center GPU, to Chinese customers like cloud giants Alibaba, Tencent, and Baidu. AMD was poised to grab market share from rival Nvidia, which had most of its AI chip sales to China blocked by previous US export rules.

In fact, AMD’s opportunity in China looked huge, as the country aims to build a US$400 billion semiconductor industry to support its tech ambitions in areas like AI, 5G, and supercomputing. Chinese companies were hungry for advanced AI accelerators to power large language models, computer vision, and other cutting-edge applications.

But in early October, the Biden administration imposed new export controls restricting shipments of high-end AI chips and chip-making tools to China. The rules were intended to cut off China’s access to technologies that could aid its military capabilities. The new rules blindsided AMD and its Chinese partners. 

The MI250 and other advanced AMD AI chips appeared to fall under the new restrictions, halting the company’s AI chip sales to China. For now, the mystery persists over the identity of the Chinese client eyeing AMD’s AI chips, a crucial factor in the company’s potential licensing prospects. 

Meanwhile, Chinese tech giants like Tencent and Baidu have fortified their chip reserves from Nvidia, anticipating regulatory hurdles. On another front, Huawei is forging ahead with its AI semiconductor development, aiming to bridge the gap left by US restrictions and bolster China’s chip sovereignty.