HBM was critical<\/a> for making advanced AI chips and compromised about half the value of the chips. \u201cSaying that we should allow more advanced HBM sales to China is the exact same as saying that we should help Huawei make better AI chips so that they can replace Nvidia.\u201d<\/p>\nOne person familiar with US government debates on HBM said the Biden administration concluded that export controls on HBM chips would be the \u201csingle biggest constraint\u201d on China\u2019s ability to produce AI chips at scale.<\/p>\n
\u201cRelaxing these controls would be a gift to Huawei and SMIC and could open the floodgates for China to start making millions of AI chips per year, while also diverting scarce HBM from chips sold in the US,\u201d he said. \u201cThis is exactly why China wants the controls revoked, and also why they should not be on the table for negotiation.\u201d<\/p>\n
Another person said China also needed HBM to package with the logic component of AI chips that the Chinese firm SophGo obtained in suspected violation of US law from Taiwan\u2019s TSMC. He said HBM was a \u201cbig bottleneck\u201d since memory chips were a critical part of AI chips which package together memory and logic chip components.<\/p>\n
China\u2019s embassy in the US declined to discuss the HBM issue but said the US was \u201cabusing export controls to suppress China\u2009.\u2009.\u2009.\u2009and seriously harming the legitimate rights of Chinese firms\u201d.<\/p>\n
As concerns mount in Washington that Trump may relax export controls to get a trade deal, there is fresh scrutiny on Nvidia for selling gaming chips in China that some groups are marketing the chips for AI applications.<\/p>\n
Chinese companies are advertising two gaming chips \u2014 the 4090D and 5090D \u2014 for AI use. Nvidia does not market the chips for AI. The development follows an FT report that smuggling enabled Chinese groups to get $1bn worth of advanced Nvidia AI chips in the second quarter. At the time, Nvidia said: \u201cTrying to cobble together data centres from smuggled products is a losing proposition, both technically and economically\u201d.<\/p>\n
John Moolenaar, head of the House of Representatives\u2019 China committee, told the FT that Nvidia and the commerce department\u2019s bureau of industry and security [BIS], which overseas export controls, had to take more action.<\/p>\n
\u201cRecent reports have revealed the massive extent of Chinese smuggling of advanced AI chips. We now see China repurposing gaming chips, typically not subject to export controls, to train advanced AI models,\u201d Moolenaar said. <\/p>\n
\u201cThe scale and brazen openness of this activity make it clear that Commerce\u2019s BIS and Nvidia must do more. Nvidia should strengthen its due diligence on customers, and BIS must step up enforcement.\u201d<\/p>\n
Nvidia said the US government had \u201cexpressly confirmed that our gaming cards sold in China did not require a licence\u201d. It added: \u201cOur gaming products are designed, manufactured, and marketed for individual gamers and consumers, and sold in compliance with US export control laws.\u201d<\/p>\n
Nvidia said retail consumers bought millions of graphics cards every year for gaming, academic, and personal use and that \u201ccannibalising gaming cards is not a viable way to create data centre compute clusters for AI\u201d. <\/p>\n
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