Factbox-How the US will cut off China from more AI chips

investing.com:

By Stephen Nellis

(Reuters) — The Biden administration on Tuesday issued a sweeping update to restrictions on exporting advanced artificial intelligence to China and other countries.

The measures are designed to prevent China from acquiring the cutting-edge chips needed to develop AI technologies such as large language models, which power applications such as ChatGPT but that U.S. officials say also have military uses that present a national security threat.

Here is a closer look at how the Biden administration is tightening the rules.

CAPTURING MORE CHIPS

The original rules last year restricted chips if they met a two-pronged test for how much computing power the chips contained and how fast they could talk to other chips. Those measures were considered important because AI systems require chaining together thousands of chips at time to chew through huge troves of data.

Nvidia (NASDAQ:NVDA), the top AI chip supplier, responded by creating chips that stayed just under the communication limits for the Chinese market but that still proved useful for AI work.

On Tuesday, U.S. officials said they would focus on computing power alone, which has the effect of controlling a broader range of chips — including Nvidia's recent creations for China.

The new rules also require chip companies to notify U.S. authorities when they are selling chips that fall just below the restriction limits so that officials can track whether those chips are being used in large quantities for AI work.

CLOSING 'CHIPLET' LOOPHOLES

Another issue that U.S. regulators sought to address is a new technology known as «chiplets» in which smaller sections of a chip are joined together to form a full chip. Analysts had expressed concern that Chinese firms could