China’s artificial intelligence (AI) stocks experienced a decline on Wednesday following reports from the Wall Street Journal about the United States’ plan to restrict shipments of AI chips to China. The move, which could take place as early as July, is expected to impact U.S. chip makers such as Nvidia. Nvidia is responsible for producing graphics chips that drive the technology behind OpenAI’s ChatGPT and Alphabet’s Bard chatbots. As a result of this news, China’s CSI artificial intelligence index fell by 3% in Asia on Wednesday. Additionally, Inspur Electronic Information Industry, a company primarily involved in computer and software production, saw a 10% slump in its Shenzhen-traded shares, while Chengdu Information Technology of Chinese Academy of Sciences experienced an almost 8% drop.
Effects on Chinese AI Companies
The repercussions of the U.S. plan were not limited to Chinese companies specializing in computer and software production. Other Chinese AI players also observed a decline in their stocks. For instance, Alibaba, listed in Hong Kong, witnessed a drop of approximately 1.6%. Alibaba had recently launched its own version of the viral chatbot ChatGPT. Similarly, Tencent, currently developing its own AI model, experienced a decline of 1.58%.
U.S. Concerns about China’s AI Advancements
According to sources familiar with the matter, the U.S. has expressed growing concerns regarding China’s ability to make significant technological advancements in the field of AI. The Wall Street Journal report stated that the U.S. Commerce Department has the potential to prevent the shipment of chips made by Nvidia and other chip makers to customers in China and other countries of concern without requiring a license. However, the Commerce Department has not yet responded to CNBC’s request for comments. This move would expand Washington’s efforts to hinder China’s access to advanced chip technology. In fact, the U.S. implemented rules in October to sever China’s ties to advanced chip equipment. Furthermore, in May, Beijing prohibited Chinese operators of critical information infrastructure from purchasing products from Micron Technology, citing the company as a “major security risk.” It was also reported that Washington urged South Korea to refrain from allowing its domestic chip makers to fill the void left by Micron in China.
Impact on Nvidia and AMD
Nvidia and AMD, two prominent U.S. chip giants, have already faced restrictions from Washington since September, preventing them from selling their advanced chips to China and Hong Kong. As a result, Nvidia reportedly began offering an alternative advanced chip, the A800, in China in November to comply with export control rules. The Journal report revealed that the new curbs would prohibit the sale of A800 chips to China unless a special U.S. export license is obtained. However, a recent report by Reuters indicated that Nvidia’s advanced A100 chips are being discreetly sold in China’s underground markets at a price of $20,000 each, twice their usual cost. Currently, Nvidia shares have increased by 187% year-to-date, while AMD shares have risen by 70.4% during the same period.
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