U.S. Chip Export Restrictions Will be ‘Huge Roadblock’ for Chinese AI Competitiveness: Expert

WASHINGTON, August 24, 2023 – China’s ability to remain competitive in the global artificial intelligence race will depend on its ability to produce its own chips, as U.S. restrictions on the export of that product to the adversarial nation will hobble its ability to move forward, experts said Thursday.

“U.S. chip export sanctions are a huge roadblock” for AI development in China, said Qiheng Chen, a senior analyst at consulting firm Compass Lexecon.

The ability to manufacture advanced chips domestically will be essential for the country to continue researching and implementing AI, Chen added at the AI event hosted by the Asia Society Policy Institute.

The Commerce Department imposed in October 2022 restrictions on exports of advanced semiconductors and chip manufacturing equipment to China and required U.S. citizens to get a permit before working with Chinese chip manufacturers.

The move was designed to limit China’s ability to compete with the U.S. by curbing its access to hardware required for cutting-edge military technology. It also makes AI research and development, a highly chip-dependent process, more difficult.

Other panelists Tuesday emphasized chip making as a top priority of the Chinese government.

The country has already moved toward independence from the U.S. in other areas, like satellites and fiber optics, as a response to Trump administration policies.

This has continued under President Joe Biden, with a 2021 executive order restricting investment in Chinese firms drawing criticism from Huawei, the Chinese telecom company.

Experts have previously said the threat of restricting access to global trade even further could make China hesitant to retaliate for the sanctions. This is because advanced chip manufacturing requires materials, components, and processes that would be difficult for a single nation to source entirely within its borders.

“It’s too complex, too global, too interdependent for one country to be able to produce all these technologies on their own,” said Jimmy Goodrich, vice president of Global Policy at the Semiconductor Industry Association, at a conference earlier this year.

A Huawei spokesperson estimated at a conference following the investment ban that it would take three to five years for Chinese chip manufacturing to become self-sufficient and rely less on American components and investments.

Biden signed the CHIPS and Science Act into law last year, two months before the export restrictions went into effect. It allocates $52 billion for American semiconductor manufacturing and gives tax credits for investments in the industry.