BEIJING, November 20 (TMTPost)— China stays vigilant as more signs that the latest U.S. curbs on high-end technologies including those in the semiconductor industry are emerging.

Credit：Visual China

The U.S. should stop politicizing, instrumentalizing and weaponizing tech and trade issues and stop disrupting the global industrial and supply chains, Mao Ning, the spokesperson of China’s Foreign Ministry, responded to a question about news that American semiconductor equipment maker Applied Materials was alleged to violate the export restrictions targeting China. “We will closely follow the developments and firmly safeguard our rights and interests,” Mao said, adding that Beijing has repeatedly made clear its position on U.S. chip export controls.

Beijing has issued warning right after the Biden administration unveiled the new restrictions of chip exports. China opposes US politicizing, instrumentalizing and weaponizing trade and tech issues, Another Chinese Foreign Ministry spokesperson Wang Wenbin commented last month. The U.S. needs to stop politicizing and weaponizing trade and tech issues and stop destabilizing global industrial and supply chains, Mao Ning commented later. Mao reiterated Wang’s remark that China will closely follow the developments and firmly safeguard its rights and interests.

Mao Ning’s latest remark on the chip curb came after Applied Materials was reported to be under criminal probe for potentially evading export controls. The U.S. Justice Department is investigating whether Applied Materials is sending equipments to China’s leading chipmaker SMIC via South Korea without export licenses, and the equipments involved are worth of hundreds of millions of dollars, Reuters cited people familiar with the matter. Applied Materials’ shares dived as much as over 8% and settled about 4% lower on Friday, underperforming the market as the U.S. stock benchmark S&P 500 edged 0.13% higher that day.

News about Applied Materials signaled how challenging environment American tech companies are facing amid tightening control of the U.S. government. Nvidia, a dominator of the artificial intelligence (AI) chip market, had to seek new ways to maintain its business in China due to such export controls.  

TMTPost learned earlier this month that Nvidia will launch a new set of chips under the name of HGX H20, L20 PCle, L2 PClel for China market, though all of them are weakened version. Compared with H100, the HGX H20 has limitations on bandwidth and computing speed, and its overall computing power is about 80% less than that of H100, namely, the comprehensive computing performance of H20 is equal to 20% of H100.

Nvidia has modified some of flagship products including A100 and H100 for exports to China, including an alternative A800 chip, as the U.S. regulators last year banned it from selling its most advanced chips to China. But even A800, the weakened version of Nivida’s cutting-edge A100 processor, is not allowed for export without first obtaining a license according to the new restrictions effective last month.

The U.S. Department of Commerce introduced on October 18 a rule entitles “Implementation of Additional Export Controls: Certain Advanced Computing Items; Supercomputer and Semiconductor End Use; Updates and Corrections”. The goal is to limit China’s “access to advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers,” said the U.S. Commerce Secretary Raimondo.

The new rule was going to come into effect following a 30-day public comment period. But Nvidia disclosed on October 25 that the U.S. government informed the licensing requirements were effective immediately. Nvidia said the licensing requirements immediately impacted shipments of its five graphics processing unit (GPU) products, including A100, A800, H100, H800, and L40S.

Several industry insiders in China expressed their concerns about impact of the new export control rule. They told TMTPost that training of large AI model’s computing in China could fall behind Microsoft-backed OpenAI in the future. TMTPost also learned Tencent and ByteDance had previously purchased H800 GPUs in large quantities, but they have not received any ordered products yet. It is highly unlikely for Nvidia to deliver any A800 GPU even though Chinese companies place their small orders in the future.