US Takes Chip War to the Next Level: Impact on China’s AI Cloud Services

US Takes Chip War to the Next Level: Impact on China’s AI Cloud Services

Ongoing battle between the United States and China over the development and control of semiconductor technology has entered a new phase.

Recent sanctions imposed by the US have already limited the supply of advanced chips to Chinese customers, impacting companies like NVIDIA and AMD. However, US government still has another area where it can exert pressure on China’s technological advancement: the training of advanced AI models.

Role of US Cloud Infrastructure Providers

Companies such as Amazon, Microsoft, and Google offer their cloud processing infrastructure to third parties, making them an important target for the US government. With the increasing importance of AI in various industries, the US does not want to give China any leeway in accessing American cloud infrastructure for training its AI models.

This new front in the US-China rivalry raises questions about the future of these companies’ business operations in China.

Intentions of the US Department of Commerce

Gina Raimondo, the US Secretary of Commerce, has made it clear that the Department of Commerce needs to address this new front in its ongoing battle with China. The Department of Commerce is responsible for enforcing commercial sanctions approved by the US government, primarily through careful control of export licenses.

Raimondo’s statement, “We cannot allow China or other actors contrary to our interests to access our cloud infrastructure to train their AI models,” highlights the US government’s determination to restrict China’s access to US cloud services.

Potential Impact on US Cloud Providers

If US government proceeds with its plan to restrict China’s access to US cloud infrastructure for AI training, companies like Amazon, Microsoft, Google, and others offering cloud processing services to their Chinese customers will undoubtedly face significant repercussions.

However, Raimondo’s statement raises another important question: what will happen to companies operating from other regions, such as Europe, that also offer these services to Chinese customers?

US Government’s Leveraging Power

The US government has a powerful tool at its disposal to ensure that any company, regardless of its origin, offering cloud services severs its commercial relationship with Chinese customers – the use of US technology.

If a company’s infrastructure relies on US-made integrated circuits or other hardware and software components, it will likely have to comply with US sanctions. This is precisely what jeopardizes the relationships of companies like ASML, Tokyo Electron, and Canon with their Chinese customers.

While the US government’s intention to restrict China’s access to US cloud infrastructure for AI training is still a declaration of intent, the potential consequences for both US and non-US cloud providers are significant. The outcome of this battle will shape the future of AI development and deployment in China.