Tag: AI Diffusion Rule

  • Nvidia Faces Rising AI Competition from Huawei Amid US Export Limits

    Nvidia Faces Rising AI Competition from Huawei Amid US Export Limits

    Key Takeaways

    1. Nvidia is facing increased competition from Huawei, which is launching new AI chips, including the Ascend 910D and 910C.
    2. Regulatory challenges from the Biden administration restrict Nvidia’s ability to sell high-tier AI chips, particularly in China, impacting its market position.
    3. The company’s financials are affected by a $5.5 billion charge due to restrictions on selling its H20 chip in China.
    4. Skepticism exists regarding Huawei’s claims about the performance of its chips compared to Nvidia’s, but the competition still poses a significant threat.
    5. Nvidia is investing $500 billion in AI in the U.S. but may not see expected returns due to regulatory hurdles and market limitations.

    Nvidia Corporation has been facing challenges since the beginning of 2025, as it tries to maintain its position as a leader in AI amidst growing competition from both domestic and foreign companies in the inference and training markets. At the same time, it also has to navigate a complicated regulatory environment due to decisions made by the current US administration.

    Competition from Huawei

    Recent reports from The Wall Street Journal (paywall) suggest that Nvidia might soon experience another setback, this time from Huawei, China’s leading AI chip manufacturer, which is preparing to launch its new Ascend 910D chip. This follows closely after the announcement of the Ascend 910C, which is expected to be revealed in the next few days.

    Regulatory Challenges

    Nvidia is already constrained by the Biden-era AI Diffusion Rule, which aims to restrict top-tier AI chips for use within the U.S. and a select group of allies. The previous Trump administration has also implemented licensing measures that limit Nvidia’s ability to sell its essential H20 chip in China, a situation that has led to a significant $5.5 billion charge in the company’s SEC filings ahead of their earnings report set for May 28th.

    Market Impact

    Huawei claims that its Ascend 910C chips offer performance similar to Nvidia’s H100. However, the Ascend 910D’s capabilities are currently unverified, and engineers remain skeptical about Huawei’s performance and efficiency claims until further evidence is presented. This skepticism could extend to the new chip as well.

    Consequently, Nvidia’s inability to sell even a modified version of its H20 chip in China is likely to influence China’s rapidly growing ambitions in AI and chip design, pushing them toward domestic solutions. At the same time, Nvidia may suffer significant financial losses and reduced profitability due to being effectively locked out of this expansive market.

    Nvidia’s Adaptations

    In the past, Nvidia has released performance-limited versions of its RTX 4090 and more recently, the RTX 5090 GPUs, including specific models like the RTX 4090D and RTX 5090D aimed at gamers and productivity users in China. Despite this, the company has committed to a whopping $500 billion in AI-related investments in the U.S. to satisfy the current administration, which may not have yielded the results Nvidia anticipated, especially considering the latest developments.

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  • Biden Administration Imposes AI Export Controls on China

    Biden Administration Imposes AI Export Controls on China

    The Biden administration revealed a major change to U.S. export controls on sophisticated AI chips and technologies today. This new framework establishes a tiered approach that allows preferred access for crucial allies while mandating special licenses for other countries. Dubbed the “AI Diffusion Rule,” the regulations are designed to restrict access to the most powerful AI chips and models, especially for nations viewed as adversaries, with China at the forefront.

    Importance of U.S. Leadership in AI

    Gina Raimondo, the U.S. Commerce Secretary, emphasized the need to maintain America’s lead in AI development and chip design, noting, “It’s critical that we keep it that way.” This rule, managed by the Commerce Department’s Bureau of Industry and Security, is a landmark move, as it is the first instance where the U.S. limits the transfer of powerful AI models alongside advanced chips.

    Access for Trusted Allies

    The updated policy allows 18 trusted allies, which includes the UK, Canada, Japan, Germany, and South Korea, to have near-limitless access to cutting-edge U.S. AI technology. In contrast, other nations will face a range of restrictions and licensing hurdles. Countries that are not under arms embargoes can still acquire AI chips with a total computing power equivalent to about 1,700 of the newest GPUs without needing a license. This provision provides some leeway for nations developing their own AI sectors, as chip orders won’t count against specific national limits. Additionally, there is a cap of 50,000 GPUs per country, but government-to-government agreements could potentially raise that number to 100,000 units.

    Special Licensing for Greater Needs

    Certain institutions in specific countries may apply for permission to purchase as many as 320,000 advanced graphics processing units over a two-year timeframe. However, there are constraints on how much AI computational power could be sent abroad by firms and other entities. The exception for the 1,700 GPUs is likely aimed at supporting universities and medical facilities rather than data centers.

    Countries like China, Russia, Iran, and North Korea, along with other embargoed nations, are already prohibited from acquiring advanced AI chips. The new regulations aim to close a gap by restricting access to powerful AI models and hinder China’s capability to develop advanced AI systems in partnership with organizations from other countries.

    Addressing Parallel Imports

    The updated rules also address the issue of parallel imports of advanced chips into arms-embargoed nations. For instance, despite earlier restrictions, AI chips were supplied to Russia via parallel imports through third countries that did not enforce sanctions. The new quotas for these third nations now pose a significant challenge to such imports of AI chips into Russia since companies will be limited in their ability to purchase chips in bulk for resale.

    Gina Raimondo remarked, “The semiconductors that power AI and the model weights are, as we all know, a dual-use technology.” They serve many commercial functions, but can also be utilized by adversaries for military advancements, nuclear simulations, and bioweapon development.

    Industry Concerns

    Nvidia, the leading manufacturer of AI chips worldwide, has expressed strong disapproval of the announcement. In a blog post, the company described the rule as “unprecedented and misguided,” arguing that it would diminish America’s competitiveness on the global stage. Nvidia claims that while these regulations are presented as an “anti-China” measure, they wouldn’t really boost U.S. security. Instead, they would control technologies that are already accessible in mainstream gaming PCs and consumer products, ultimately harming American innovation.

    The new export regulations will be subject to a 120-day consultation period, wherein the incoming Trump administration will need to consider input from industry leaders and international allies. After this timeframe, the Trump administration could either amend or enforce the new rules. This timeline has raised concerns about consistency and the possibility of major policy changes with the new leadership.

    Biden officials have defended the need for these rules, pointing to the fast pace of global AI advancements. National Security Advisor Jake Sullivan cautioned about the potential “transformative impacts” that AI could have on both the economy and national security in the near future.

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