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Raimondo’s Nvidia Chip Warning, Vow of Firmer Curbs Irks China

 

US Commerce Secretary Gina Raimondo this week made some of her strongest remarks yet on Washington’s efforts to stop China from accessing its advanced artificial intelligence chips – and they did not go down well in Beijing.

“Our national defence is more than guns, missiles, tanks and drones. It’s technology, it’s innovation, it’s working with our allies,” Raimondo said, at a defence forum on Saturday.

“We can’t let China get these chips. Period.”

 

Also on AF: China Investment Curbs May Not be Part of Key US Defence Bill

 

Washington demands better cooperation from chipmakers

Raimondo also took pointed aim at Nvidia — the most valuable US chipmaker — over its efforts to design new AI chips for China that meet export control requirements.

“I’m telling you, if you redesign a chip around a particular cut line that enables [China] to do AI, I’m gonna control it the very next day.”

Raimondo was referring to Nvidia’s plan to introduce three new AI chips, specifically for the Chinese market, which the company announced within days of the US expanding its existing export controls in mid-October.

The expanded rules targeted two Nvidia chips — the A800 and H800 — that the chipmaker designed to meet US export control rules originally announced in October 2022.

Raimondo also warned the US semiconductor industry that Washington was set to “transform” its approach to export controls to prevent chipmakers like Nvidia from continuing to innovate specifically for the Chinese market.

“We need 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,” Raimondo said.

“We have to get to a place with industry where we say our national security goal is to have no AI special sauce in your chip… just don’t do it.”

 

China hits out

Raimondo made her remarks addressing China as an adversary that US needs to not just “out-innovate” but also prevent from progressing in critical technologies.

“Our adversaries, most particularly China, are showing up every day with money, infrastructure and jobs, and if we want to win, we need to show up too,” Raimondo said at the very start of her remarks.

Technologies like super computing and AI “in the wrong hands is deadly as any weapon that we could provide,” she said at one point.

“If you don’t go far enough, China gets our technology and they could do nuclear simulation or whatever they want. A modern fighting force is more technologically enabled than ever,” she said later.

Raimondo’s remarks drew sharp criticism from Chinese foreign ministry spokesperson Wang Wenbin, who hit out at contrasting statements by Washington, noting an earlier remark by US President Joe Biden that “the US has no intention to halt China’s economic development or scientific and technological progress.”

“Conflicting statements from US officials make it challenging to gain trust from China,” Wang was quoted as saying in state media outlet Global Times.

“China never bets against the US, and has no intention to challenge the US or to unseat it.”

 

‘Imaginary enemy’

Referring to a summit between Chinese president Xi Jinping and Biden in San Francisco last month, Wang said the US needed to implement the “important consensus” they reached at during the meeting.

The US needed to “cease treating China as an imaginary enemy, correct the misguided approach of promoting major power rivalry under the guise of competition, and avoid saying one thing and doing another,” he added.

Raimondo’s remarks at the Reagan National Defense Forum were some of her sharpest remarks targeting China and referred to everything from Beijing’s efforts to encompass US export controls to Washington’s efforts to involve allies in its efforts to cut-off its rival from critical tech.

“Every day China wakes up trying to figure out how to do an end run around export controls every minute of every day… which means every minute of every day we have to wake up, tightening those controls and being more serious about enforcement with our allies… with the Dutch, with the Japanese, with the Europeans,” Raimondo said.

 

Wack-a-mole with Huawei, SMIC

Raimondo also explained why the US Commerce Department — under her leadership — was looking to change its approach towards export controls.

When the segment’s host brought up the launch of a new smartphone by China’s sanctions-hit tech giant Huawei, Raimondo quipped “when I was in China, thank you very much.”

The phone’s launch became all the rage in China, as analysts said it was powered by the country’s first-ever homegrown 7nm chip. Huawei is believed to have developed that chip with state-backed chipmaker Semiconductor Manufacturing International Corporation (SMIC).

Both firms are on the US entity list — which means US companies are not allowed to sell to them. But Raimondo said that this given framework becomes ineffective when “Huawei spins out another company.”

“It’s really a constant wack-a-mole,” she said.

“We put them on the list and literally a week from now there’ll be another company, or China will create another subsidiary.”

Describing “countrywide controls” implemented in October 2022 as a measure to counter this, Raimondo said: [China is] capable of doing very bad things and we’re gonna deny the entire country this class of equipment.”

 

 

Increasing cooperation with Japan, South Korea

Raimondo said Washington needed more funds for its efforts to tackle competition from China in technology. And she vowed to involve US allies to do so, in an effort to avoid any harm to US businesses.

“We have to get even more serious about working with our allies. It is not okay if we deny China something and the Japanese and the Germans are selling them component parts to make EUV tools.. it’s not okay,” Raimondo said.

EUV or extreme ultraviolet light is essential to chip production and machines enabled with the technology are at the core of Washington’s chip war with China.

Implementing export control without US allies was “doubly problematic,” Raimondo said.

“What good is it to deny US companies revenue if China gets the technology anyway from the Germans, the Dutch, the Japanese or the Koreans?

“America leads the world in artificial intelligence. America leads the world in advanced semiconductor design… We are a couple of years ahead of China,” Raimondo said.

“No way are we going to let them catch up. We cannot let them catch up, so we are going to deny them our almost cutting-edge technology.”

 

 

Focus on artificial intelligence

Raimondo also addressed concerns of the US semiconductor industry around the loss of revenue that would result from cutting-off the Chinese market.

Nvidia warned last month of a steep revenue hit in China — where it commands more than 90% of a $7-billion AI chip market. Nvidia’s financial chief warned in June that expanding chip export curbs against China will lead to “a permanent loss of opportunities for the US industry.”

The chipmaker’s chief Jensen Huang also issued a similar warning against the US-china chip war in May.

“I know there are CEOs of chip companies in this audience who are a little cranky with me when I did that. You’re losing revenue… [but] such is life,” Raimondo said.

“Protecting our national security matters more than short-term revenue.”

Adding that democracy was “good for business,” Raimondo said: If you’re not selling to China a decade from now it’s not because of our export controls. It’s because China is designing you out, because they want to decouple.”

Raimondo also referred to a wide-ranging executive order on “safe, secure, and trustworthy” AI, that US president Biden signed in October.

She said she was working towards finding a balance and setting guardrails, to ensure Washington does not overreach and stifle innovation, but also so the industry does not create potentially dangerous AI models.

“There is a view in Silicon Valley… move fast and break things… But we can’t embrace that with AI.. it is too dangerous,” Raimondo said.

“You can’t break things when you talk about AI.”

 

  • Vishakha Saxena

 

Also read:

 

Nvidia’s Best New AI Chip for China ‘Delayed Until Next Year’

 

US Chip Export Ban Seen as Big Opportunity for Huawei

 

US Curbs Set Off Sales, Tech Boom for China Chip Equipment Firms

 

ASML to Ship Top Tech to China Even as Dutch Chip Ban Starts

 

Banned Nvidia Chips Available in China’s Underground Markets

 

Chinese Tech Giants Rush to Buy Nvidia’s Top AI Chips – FT

 

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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