The U.S. Commerce Department reportedly plans to implement new rules designed to restrict the sale of chips and chip manufacturing equipment to China.

The plan was reported today by Reuters, which attributed the information to multiple sources familiar with the matter. Commerce Department officials are expected to announce the export restrictions next month. However, there is reportedly a chance that the announcement will be pushed back to a later date. 

The upcoming export restrictions are said to be based on a series of letters that the Commerce Department sent to KLA Corp., Lam Research Corp. and Applied Materials Inc., three major suppliers of chip manufacturing equipment. The letters prohibited the three companies from supplying customers in China with equipment that can be used to make sub-14 nanometer chips. 

The new rules set to be released by Commerce Department plans to release will reportedly also build on export restrictions that were applied to products from Nvidia Corp. and Advanced Micro Devices Inc. in recent weeks.

Earlier this month, Nvidia disclosed that it had been notified of new export restrictions pertaining to its A100 and H100 graphics processing units for data centers. Both GPUs are optimized to run artificial intelligence models. The government has prohibited Nvidia from exporting the A100 and H100 to China, while future Nvidia chips with comparable or higher performance than the A100 are also covered by the rule.

AMD was a few weeks ago notified of similar restrictions that the company believes apply to its MI250 chip. Like Nvidia’s A100 and H100, the MI250 is a data center processor optimized for running AI workloads.

The sources who spoke to Reuters stated that the Commerce Department’s rules will codify the export curbs applied in recent weeks to Nvidia and AMD’s AI chips. Moreover, today’s report stated that the rules could be expanded to cover products from other chipmakers. It’s believed that export restrictions might also be applied to data center systems such as servers that contain chips subject to the Commerce Department’s upcoming regulations.

Some of the sources cited by Reuters detailed that the upcoming regulations will “likely include additional actions against China.” They added that U.S. officials have reached out to allies in an effort to have them implement similar export restrictions.

Nvidia has told investors that its revenue guidance for the third quarter includes $400 million worth of potential chip sales to China which may be subject to the restrictions. AMD, in turn, doesn’t expect the new regulatory requirements to make a material impact on its earnings. 

Photo: Unsplash

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