With new China AI chip restrictions, U.S. takes aim at a critical niche

The United States beefed up its effort to cut off the flow of advanced technology to China by instructing Nvidia Corp (NVDA.O) and Advanced Micro Devices (AMD.O) to stop sending their flagship artificial intelligence chips there. While the news shocked the chip sector by the time markets closed Thursday, sending the Philadelphia semiconductor index down 1.9% and Nvidia and AMD down 7.6% and 3% respectively, the letters from the U.S. officials appeared to target a narrow but critical part of China's computing industry.

GPUs "have been totally uncontrolled to China and to Russia, so in a lot of ways I see this action as kind of catching up to where the controls probably should have been if we were really serious about trying to slow China’s AI growth," said Emily Kilcrease, a senior fellow at the Center for a New American Security.

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