Escalating the tit-for-tat battle with China, the US is planning to restrict Chinese companies and their access to US cloud-computing services, the Wall Street Journal reported on Tuesday, according to people familiar with the situation.
The Biden administration’s new rules, if adopted, would mean that US cloud providers such as Amazon and Microsoft will have to seek government permission before they can provide cloud-computing services that use advanced artificial intelligence chips to Chinese customers.
“The proposed restriction is seen as a means to close a significant loophole. National security analysts have warned that Chinese AI companies might have bypassed the current export controls rules by using cloud services,” the publication added.
Currently, cloud computing services allow customers to gain powerful computing abilities, without purchasing advanced equipment such as semiconductors. Despite closing doors on advanced A100 and H100 chips from Nvidia, China, using the loophole is able to circumvent the sanctions.
China restricts raw materials for chip manufacturing
Notably, the proposed restrictions by Washington come on the same day as China decided to impose export controls on two rare elements, essential for the manufacturing of semiconductors.
The Commerce Department is expected to unveil the restrictions, as early as next week as part of semiconductor export control policy.
Starting August 1, exports of gallium and germanium, among several other industrial compounds will be subject to restrictions, Beijing announced on Monday, in order to “safeguard national security and interests”.
China’s Ministry of Commerce and Administration of Customs took the decision, laying it out that the exporters will have to seek special approval from the State Council, China’s cabinet, for the listed items.
For years, the US led the technology battle with China. However, the tips have recently scaled in Beijing’s favour. According to a study presented by Special Competitive Studies Project (SCSP), the US could lose the tech competition to China if it does not take action on the 5G, AI, and microchip core fronts.
The report added that the tech race would be going through its critical phase in the 2025-2030 period. During this window, Beijing might be able to edge out the USA if the current trend continues.
(With inputs from agencies)
