US Sanctions Wave Group will hit the CCP’s AI technology ambitions | Blacklist | Entity List
March 5, 2023 by
archyde
On Thursday (March 2), the U.S. Department of Commerce added 28 Chinese entities or individuals to the trade blacklist, including Inspur Group. U.S. sanctions will hit China’s ambitions in artificial intelligence (AI) hard.
Inspur, the
world’s second largest AI server manufacturer, has been included in the U.S. Department of Commerce’s blacklist along with two subsidiaries of BGI and chip developer Loongson, facing export controls. The reason is that these companies are suspected of activities contrary to the national security and foreign policy interests of the
United States.
Shares in Inspur Electronic Information Industry Co., Ltd., Inspur’s main listed company in Shenzhen, plunged 10 percent on Friday, while shares in the company’s software arm, Inspur Software, fell 2.6 percent in Shanghai. Hong Kong-listed Inspur Digital fell 7.2 percent.
Inspur Group provides more than half of its AI servers in China’s domestic market. Adding Inspur to the U.S. Commerce Department’s Entity List means it will become increasingly difficult for the Shandong-based company to source key components from U.S. suppliers, a move that would severely hamper the development of China’s computing capabilities.
Inspur provides servers for many large domestic technology companies
Kevin Wolf, a partner at the global law firm Akin Gump Strauss Hauer & Feld, told Bloomberg that the sanctions against Inspur are similar to those imposed on Huawei in that both U.S. products and foreign products made with U.S.
technology or tools are banned. Ban on exports to Inspur, unless licensed by the Department of Commerce, which effectively means that all semiconductors on the planet are included.
The lack of advanced chips from U.S. suppliers such as Nvidia and Intel could be a particular problem for Inspur. In Inspur’s last 2019 annual report disclosing its top suppliers, Nvidia ranked second among its top five suppliers, accounting for nearly 8% of that year’s procurement budget.
According to information that Inspur gave investors last month, Inspur is the main supplier of AI servers for Baidu, which is betting heavily on the Chinese-style ChatGPT service.
According to earlier company announcements, Inspur has also signed strategic cooperation agreements with Alibaba Cloud and Tencent Holdings, and Inspur’s servers are also used by major Chinese infrastructure providers such as China Mobile.
U.S. Sanctions Curb China’s Computing Capabilities
Xiang Ligang, founder of telecom-focused Beijing-based information portal cctime.com, told the South China Morning Post that the sanctions on Inspur were a clear signal that the US wanted to hit China’s computing power. “Inspur is a very important server company (to China). The
United States is trying to contain China’s (CCP) development in computing power.” He said.
Liu Jingfeng (transliteration), a senior researcher at Jazzyear, a Beijing science and
technology think tank, told Nan Zao that computing power and data resources are the two most critical tools for promoting the development of artificial intelligence.
According to a research report released by Huatai Securities last month, as domestic Internet manufacturers continue to develop products similar to ChatGPT, the upsurge of GPT large-scale model training may bring about the rapid release of underlying computing power demand, which is expected to drive the demand for AI servers.
In June 2020, the U.S. Department of Defense identified Inspur as having ties to the Chinese military. Inspur Corporation signed a strategic cooperation agreement with the 36th Research Institute of China Electronics Technology Group Corporation, one of China’s top ten core military industry groups. A new dream in the field of informatization.”
Intel then temporarily suspended shipments to Inspur, but later resumed shipments after it became clear that the company was not sanctioned. Mainland media reported at the time that Intel was the largest supplier of Inspur Information: in 2019, the purchase amount was 17.896 billion yuan, accounting for 37.53%; in 2018, the purchase amount was 14.576 billion yuan, accounting for 31.51%.
The U.S. Commerce Department also added artificial intelligence unicorn 4Paradigm, which provides artificial intelligence solutions to clients including China’s largest bank and state media People’s Daily, to its latest round of trade blacklists.
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