The Biden administration has announced it is tightening export controls on semiconductor chips used for artificial intelligence and the equipment used to manufacture them, in an effort to prevent China from acquiring or producing advanced chips. The rules update restrictions that the U.S. announced a year ago prohibiting the sale of chips above a certain capability threshold in China and other restricted countries, and banned the sale of specific chip manufacturing equipment. The new rules aim to close loopholes that emerged from the 2022 export control curbs, and to account for technological developments since then. The export restrictions announced Tuesday have been extended to chips that have fewer capabilities than those that were previously subject to the rules. They also imposed controls on additional types of chip manufacturing equipment.

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The U.S. will take steps to prevent American chipmakers from selling products to China that circumvent government restrictions, a U.S. official said, as part of the Biden administration's upcoming actions to block more AI chip exports. The new rules will be added to sweeping U.S. restrictions on shipments of advanced chips and chipmaking equipment to China unveiled last October. The updates are expected this week, other people familiar with the matter said, though such timetables often slip. The new rules will block some AI chips that fall just under current technical parameters while demanding companies report shipments of others, said the official, who provided information on condition of anonymity.

Nvidia Corp, a chip designer, said on Wednesday that U.S. officials had told it to stop exporting two top AI chips for artificial intelligence work to China, a move that could cripple Chinese firms' ability to perform advanced work such as image recognition and harm Nvidia's business in the country, Reuters reports. The statement marks a significant increase in the United States' crackdown on China's technical capabilities as tensions rise over the destiny of Taiwan, where AI chips for Nvidia and nearly every other major semiconductor business are built. The embargo, which affects its A100 and H100 chips meant to accelerate machine learning operations, might impede the completion of the H100, the business's flagship AI chip launched this year, according to the company. Advanced Micro Devices, Inc. (AMD) shares declined 3.7% after hours. According to an AMD spokeswoman, the company has received new licensing requirements to prevent its MI250 artificial intelligence processors from being transported to China.