US govt warns that sanctions swerving GPUs will fall under their 'control the very next day'
Secretary Raimondo said she didn’t want to specifically call out Nvidia.
Update, 12/4/2023, 8.00 pm PT:
Tom's Hardware has received the following statement from an Nvidia spokesperson:
“We are engaged with the U.S. government and, following the government’s clear guidelines, are working to offer compliant data center solutions to customers worldwide.”
Original story:
The US Commerce Secretary, Gina Raimondo, is determined to stop cutting-edge AI chips from getting into China's hands. During a speech at the Reagan National Defense Forum (RNDF) this weekend she appealed for more cash, so her department could effectively apply sanctions. It is also notable that she warned sanctions-swerving GPU and AI chip makers that things are going to change – concerning chip redesigns to circumvent tech sanctions.
“We can't let China get these chips, period,” emphasized Raimondo in her on-stage 'Fireside Chat' with CNBC’s Morgan Brennan. But to be successful in this goal – with all its national security implications - she made it clear that more funding was needed, and a deeper relationship with tech companies would be required going forward.
The funding question seems straightforward. Raimondo told attendees at the RNDF that the Commerce Department’s Bureau of Industry and Security, responsible for managing export controls, only received $200M. More would be needed. “That’s like the cost of a few fighter jets. Come on,” appealed the Commerce Secretary. According to our own sourced figures, a Lockheed F-35A fighter jet costs between $80M and $100M. An F-22 Raptor costs nearly $150M. It seems reasonable to say that keeping AI from China - and out of its missiles, drones, aircraft, and tanks - is probably worth a greater investment.
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“Nvidia, for example”
The other important topic highlighted by Raimondo was better cooperation with GPU and AI chip makers, to keep their cutting-edge technologies away from China. “The Chinese are going to do everything they can to find loopholes but we have to get faster more agile and think differently about our strategies,” the US Commerce Secretary said.
Moving onto the specifics of improved cooperation with US and allied tech companies, Raimondo said she had noticed “Nvidia for example” was slicing chip specs “just below that [specification] cut.” This was traditionally how export controls worked, admitted Raimondo, but said she was seeking “a new way to have a continuous dialogue with industry where our Engineers can go toe-to-toe with their engineers, and we go to them and say our intent is to deny China technologies that can do XYZ.” In other words, sanctions may be readjusted somehow to target capabilities rather than levels of performance.
If companies don’t cooperate with this new type of relationship, the US Commerce Secretary hinted that specific export cut lines could be adjusted “the very next day.”
The above speech from Raimondo is a clear indicator that the government wants US firms to follow not just the letter, but the spirit of the rules concerning AI and computing export controls. We discussed this in our report last month after the Cerebras boss called Nvidia ‘Un-American’ for its apparent sanctions-swerving GPU reconfiguring.
Of course, the US Commerce Secretary would like there not to be sanctions like those outlined above, for the greater benefit of American companies. However, she said her department was “eyes wide open about the threat from China.” She implored tech companies to “work together so your businesses are strong and lead the world, but also so our national security is protected.”
US officials going to Taiwan to explain China chip curbs
US officials plan to travel to Taiwan to explain the finer points of advanced technology curbs aimed primarily at China. Reuters reports that Taiwan Economy Minister Wang Mei-hua will greet a delegation tasked with explaining the complicated new US rules to the many important tech companies on the democratically-governed island.
The US officials, who were not named by Taiwan’s Central News Agency, will visit next month and concentrate their efforts around important chip hubs in Hsinchu and Tainan.
Mark Tyson is a news editor at Tom's Hardware. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.
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Bluoper While the actual need to stop ai chips from ending up in China is debatable, it would be nice to actually see the US government crack down on big tech companies and prevent them from bending the rules.Reply -
ingtar33 Reply
this is just an aggressive expansion of the fab wars between the West and China. AI just created another "possible" stake in a game of high stakes trade policy.Bluoper said:While the actual need to stop ai chips from ending up in China is debatable, it would be nice to actually see the US government crack down on big tech companies and prevent them from bending the rules.
I predicted months ago the USA would look very badly on Nvidia's skirting of the law on this issue, this isn't an empty trade policy for companies to skirt, but the AI aspect has turned it into a national security issue. Nvidia is playing with fire right now, and they're going to find a way to get all gpu exports to china being banned if they're not careful. (for both nvidia and amd)
Granted maybe that's the outcome that Nvidia is hunting for, but it seems awful reckless. My only guess is the decision makers at nvidia don't realize how serious the USA is taking this issue. Previously with other tech restrictions to china (mostly related to fabs and fab technology) the laws were sorta lax, I mean it was an issue of national interest, but it wasn't one of national security; though it was for Taiwan. Taiwan had long ago identified the Fab interests in the USA, and positioned themselves to be strong partners in the enforcement of these trade limits, knowing that if they made themselves an indispensable ally the USA would raise little issue with Taiwan's own Fab industry AND would have one more reason to protect Taiwan from Chinese aggression.
Unless the leadership of nvidia are madmen, the likelyhood is they considered this an extension of the fab/fab tech export restrictions. not realizing this was a national security issue.
That or they're so greedy they don't believe the law applies to them. -
helper800 Reply
The 'laws' that public companies follow are of maximum profit while not breaking any laws themselves. Can you really blame any publicly owned company following their creed without implicating free enterprise corporatism?ingtar33 said:That or they're so greedy they don't believe the law applies to them. -
Bluoper Reply
The problem is that they do try very hard to make the laws put in place non applicable to them without trying to conform to the laws. While yes this is because of maximum profit, its mostly because they don't get any repercussions for what they are doing.helper800 said:The 'laws' that public companies follow are of maximum profit while not breaking any laws themselves. Can you really blame any publicly owned company following their creed without implicating free enterprise corporatism? -
helper800 Reply
There are no repercussions because what they are doing is largely not illegal. We can talk about ethics, but that would never end and I am sure we are close to being on the same page.Bluoper said:The problem is that they do try very hard to make the laws put in place non applicable to them without trying to conform to the laws. While yes this is because of maximum profit, its mostly because they don't get any repercussions for what they are doing. -
Bluoper Reply
I'm mostly talking about governmental lobbying.helper800 said:There are no repercussions because what they are doing is largely not illegal. We can talk about ethics, but that would never end am I am sure we are close to being on the same page. -
atomicWAR I'd skip this back and forth game if I were the american pols and just ban all gpu/ai sales (last 3 gens as applicable) from Nvidia, AMD, Intel and Cereberus to China. This skirting restrictions has disgusted me. It may be legal but it is wrong ethically. And I mean it's not like China doesn't have access to their home grown gpus/ai chips. So were not killing their pc gaming/ai markets outright. Heck maybe it would even help their drivers progress faster (mtt s80 is already doing well imho on driver progression).Reply -
helper800 Reply
If you completely cut off market access to China, these companies will lose hundreds of millions, if not many billions of dollars every quarter. I morally do not like what Nvidia is doing either, but killing one of their biggest markets outright by governmental decree is a step too far in my opinion.atomicWAR said:I'd skip this back and forth game if I were the american pols and just ban all gpu/ai sales (last 3 gens as applicable) from Nvidia, AMD, Intel and Cereberus to China. This skirting restrictions has disgusted me. It may be legal but it is wrong ethically. And I mean it's not like China doesn't have access to their home grown gpus/ai chips. So were not killing their pc gaming/ai markets outright. Heck maybe it would even help their drivers progress faster (mtt s80 is already doing well imho on driver progression). -
atomicWAR Reply
Fair point but sanctions/embargo's have hurt company sales since always. It may be their largest market but that alone doesn't exonerate companies like Nvidia.helper800 said:If you completely cut off market access to China, these companies will lose hundreds of millions, if not many billions of dollars every quarter. I morally do not like what Nvidia is doing either but killing one of their biggest markets outright by governmental decree is a step too far in my opinion.
At best we could allow non-ai capable cards/cpus into China to counter these losses even if they'd only somewhat help do so.
AI only recently really blew up (chat gpt anyone?)...So Nvidia and others can afford this haircut so to speak imho. If we were decades in to the recent AI boom....that may be another story...may. But as it stands now I mostly disagree with your conclusion even if I see and sympathize where you are coming from as I am not a fan of government over reach. But sometimes, issues like this need to hurt bottom lines to get a job done.