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That was bombastic, given that it had taken her department a full year to rework the restrictions to cut off Nvidia\u2019s previous workaround. But America\u2019s five-year campaign against Chinese technology is intensifying. Earlier this month it was reported that Jensen Huang, Nvidia\u2019s chief executive, and two fellow chip bosses had been summoned to testify in Congress about their Chinese business. On January 19th ABB, a Swiss industrial group, revealed that American lawmakers were investigating its links with China. ABB said it was co-operating with the investigation; Nvidia has said that it is working closely with the government to ensure compliance with the export controls.<\/p>\n
Neither Democrats nor Republicans are likely to relent. In a presidential-election year Joe Biden, the unpopular Democratic president, cannot afford to look weak on China. His Republican predecessor and main rival, Donald Trump, has long been America\u2019s China-basher-in-chief. China hawks in Washington want to stymie Chinese efforts both to get around the rules and to recreate the necessary technological capabilities at home. However, the mixed record of export controls so far shows why harsher measures will be difficult to design\u2014and not necessarily more successful.<\/p>\n
China has found some ways to work around the existing controls. To Ms Raimondo\u2019s chagrin, for instance, it is possible to train AI models using chips that are not necessarily at the cutting edge, so long as you have enough of them. If the sale of any chip which can \u201cdo AI” is to be banned, as she implies, America must restrict the flow of a much broader array of chips to China.<\/p>\n
It is hard to know just how much broader. Trade statistics do not break out the graphics processing units (GPUs) used to train and run AI models from the larger flow of integrated circuits. But a sense of the scale of such a ban can be gleaned by examining the financial statements of Nvidia, which sells a range of GPUs. It has earned between 21% and 26% of its revenues from China over the past few years. In the nine months to October the company took in $8.4bn from the Chinese market. Almost all of Nvidia\u2019s products can be used to \u201cdo AI”. Mr Huang has said that his firm has no \u201ccontingency” for being cut off from China.<\/p>\n
\n\t\t\t\t\tView Full Image<\/span>\n\t\t\t\t<\/p>\n<\/p><\/div> Another difficulty for America stems from enforcement. The Department of Commerce is empowered to punish any transgressions it discovers. Last year it fined Seagate, a hard-drive manufacturer, $300m for allegedly breaching export controls by sending components to Huawei, a blacklisted Chinese tech champion. But it is the chip firms themselves that are largely responsible for enforcement. That includes ensuring that their customers are not, in fact, a buying front for Chinese entities with which trade is prohibited. This is hard. \u201cYou have coin-sized devices and technologies that are widely commercially available, and indistinguishable from the controlled technologies, distributed around the planet,” says Kevin Wolf, an American lawyer and former official.<\/p>\n The result is a situation ripe for smuggling, which experts say is impossible to quantify but doubtless rife. It also encourages transshipment. Firms in countries that have not signed on to the American export-control regime, like Singapore, can buy chips and send them on to Chinese entities without the knowledge of the American firms or the Department of Commerce. Nvidia\u2019s most recent quarterly earnings for 2023 show that its sales to Singapore grew by a factor of five over the same period in 2022, faster than anywhere else.<\/p>\n
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