Notebooks exported to China may be subjected to case-by-case review due to built-in AI chips

Amanda Liang, Taipei; Jack Wu, DIGITIMES Asia 0

Credit: AFP

The US Bureau of Industry and Security (BIS) under the Department of Commerce (DOC) issued additional export controls on March 29 local time.

According to the Federal Register of the US government, this 166-page regulation serves as a supplement, correction, and clarification to the two major export control chip bans issued on October 7, 2022, and October 17, 2023, respectively. The additional export controls are set to take effect on April 4.

Reuters recently revealed the new regulations uploaded by BIS to the Federal Register. In the document, BIS pointed out that the new regulations are currently in the phase of explanation, revision, and solicitation of feedback. It's also emphasized that all "comments for revisions, corrections, and clarifications in this rule must be received by BIS no later than April 29, 2024."

According to the Reuters report, the purpose of the new regulations is to make it more difficult for China to obtain advanced AI chips from the US. In the future, restrictions on exporting chips to China will also apply to notebooks equipped with these regulated chips.

With the shift from "exceptional permits" to "case-by-case review" for notebooks with built-in advanced AI chips, is the US chip ban expanding to high-end laptops?

In response, the DOC emphasized in the BIS document that the latest releases of supplements and updates aim to increase the transparency and predictability of export control regulations. This is intended to help exporters, manufacturers, and end-users to clarify and comply with export control regulations.

Through these updates and clarifications, the BIS also hopes to ensure an effective implementation of the export control measures while reducing unnecessary restrictions on compliant trades. (Please refer to the Federal Register website for more information.)

Previous waves of export controls

Between October 2022 and October 2023, the BIS issued two waves of export control measures regarding advanced semiconductor chips and computing equipment to China. The 2023 edition of the ban continued the export control regulations from the 2022 ban, controlling both products and sources.

On one hand, it restricted the flow of advanced chip-related products to corporate entities in specific countries and regions such as China. On the other hand, it restricted US companies' support for advanced semiconductor production activities in China.

As a result, NVIDIA, AMD, Intel, and other manufacturers have had several high-end AI GPUs and AI chips that couldn't be exported to China. Even high-end gaming graphics cards like the RTX 4090 faced restrictions. In response, manufacturers have released reduced-specification versions of AI chips specifically for China to continue to service the Chinese market.

However, apart from rushing to acquire Nvidia's reduced-spec AI chips, reports have emerged that underground factories in China are removing AI GPUs from high-end notebooks to build AI computing workload. Quoting US Secretary of Commerce Gina Raimondo, CNBC pointed out that China cannot be allowed to obtain the most complex, advanced, and powerful AI chips, as it poses a threat to national security.

Why the additional regulations?

Raimondo previously revealed that they do not rule out revising and announcing new export control regulations at least once a year. Despite the second ban being issued just over 5 months ago in October 2023, the industry has already encountered many gray areas in practice where regulations are unclear. While the industry is studying the new 166-page document, BIS has also provided explanations and clarifications on specific cases raised by industry players.

It's estimated that it will take legal teams 5 to 7 days to analyze the changes in this BIS document. However, while the official ban in 2023 excluded most consumer chips used in notebooks, smartphones, and gaming devices, the latest reports indicate that the new regulations will expand to cover notebooks equipped with high-end AI chips.

Although Reuters' report on regulating notebooks exported to China still requires further clarification, from the newly released EAR744.23(d) supplement, it seems that the US government will adopt a case-by-case review policy for high-end AI chip product exports to China, reviewing information such as technical levels, customer identities, and compliance plans.

Which notebooks with built-in AI chips will be further regulated? This is something that still needs to be clarified by the industry. However, regarding the "case-by-case review" policy, the bureau stated that this aims to provide flexibility for BIS to evaluate whether to permit the export based on specific situations and potential risks.

It also stated that BIS can ensure that the export control measures can effectively prevent the improper transfer of sensitive technology while facilitating compliant trade activities under appropriate circumstances.