In recent news, Chinese companies focused on artificial intelligence (AI) experienced a decline in shares following reports that the United States is considering new export controls on microchips to China. The CSI artificial intelligence index in China dropped 3% as a result of this news. Companies such as Inspur Electronic Information Industry saw a 10% decrease in shares, while Chengdu Information Technology fell nearly 8%. Additionally, Alibaba, a retail giant that recently launched its own chatbot called ChatGPT, observed a 1.6% decline in their Hong Kong-listed shares. Tencent, another company focused on developing its own AI model, also experienced a 1.58% decrease in shares.
According to reports from the Financial Times and Wall Street Journal, the Biden administration is considering closing loopholes in the sale of powerful chips used for AI development in China. This move is expected to impact the sales of microchips in the world’s leading semiconductor market. It reflects Washington’s strategy to contain China’s technological rise, potentially escalating tensions between the two largest economies in the world.
The potential implementation of new export controls is projected to happen as early as July and will significantly affect major US chip manufacturers, such as Nvidia. Nvidia produces graphics chips that are vital for OpenAI’s ChatGPT and Alphabet’s Bard chatbots. The US Commerce Department may stop shipments of chips made by Nvidia and other chip makers to China and other countries without first obtaining a license, as reported by the Wall Street Journal. This development resulted in a 4.6% decline in Nvidia shares, as the company generates about a fifth of its revenue from China. The rival company, Advanced Micro Devices, also experienced a 3.7% drop in stocks.
In addition to the potential export controls, the US government is preparing to issue an executive order aimed at screening China-bound investment. The objective of this order is to reduce the likelihood of US technology supporting the Chinese military.
The implications of these actions go beyond the AI industry. They reflect the wider tensions and competition between the US and China in the fields of technology and national security. China has been striving to become a global leader in AI, investing heavily in research and development. Meanwhile, the US aims to protect its technological advancements and maintain its position as a leader in the industry.
The proposed export controls and screening of China-bound investment illustrate the US government’s determination to limit China’s access to advanced technology and prevent it from achieving dominance in strategic sectors. However, these measures are expected to have wider repercussions, potentially impacting international trade and relations between the two countries.
In conclusion, the news of potential export controls on microchips to China has resulted in a decline in shares of Chinese AI-focused companies. The US government’s proposed measures are part of its broader strategy to contain China’s technological rise and protect its own national security interests. The implications of these actions extend beyond the AI industry and may have wider consequences on international trade and relations between the two largest economies in the world.