Chinese President Xi Jinping and U.S. President Donald Trump.
Dan Kitwoodnicholas Kamm | Afp | Getty Images
China is calling out the U.S. for “discriminatory restrictions” in its use of export controls in the chip industry, after the Trump administration accused the world’s second-largest economy of violating a preliminary trade deal between the two countries.
“Recently, China has repeatedly raised concerns with the U.S. regarding its abuse of export control measures in the semiconductor sector and other related practices,” China U.S. embassy spokesperson Liu Pengyu told NBC News.
It’s the latest escalation in the simmering trade war between the U.S. and China, particularly as it pertains to artificial intelligence and the infrastructure needed to develop the most advanced technologies.
China’s response comes after President Donald Trump said early Friday in a social media post that China had violated a trade agreement. U.S. Trade Representative Jamieson Greer told CNBC in an interview that the “Chinese are slow rolling its compliance.”
On May 12, the U.S. and China agreed to a 90-day suspension on most tariffs imposed by either side. That agreement followed an economic and trade meeting between the two countries in Geneva, Switzerland.
“China once again urges the U.S. to immediately correct its erroneous actions, cease discriminatory restrictions against China and jointly uphold the consensus reached at the high-level talks in Geneva,” the embassy spokesperson said.
The statement didn’t specify any actions taken by the U.S. Earlier this month, China said the U.S. was “abusing” export controls after the U.S. banned American companies from importing or even using Huawei’s AI chips.
The U.S. has limited exports of some chips and chip technology to China as part of a national defense strategy dating back to the first Trump administration.
In 2019, President Trump cut off Huawei’s access to U.S. technology, which forced it to essentially exit the smartphone business for a few years before it could develop its own chips without use of U.S intellectual property or infrastructure. In 2022, the Biden administration first moved to cut off Chinese access to the fastest AI chips made by Nvidia and Advanced Micro Devices.
The restrictions have intensified of late, and earlier this week, chip software makers, including Synopsys and Cadence Design Systems, said they had received letters from the U.S. Commerce Department telling them to stop selling to China.
Nvidia, which makes the most advanced semiconductors for AI applications, has vocally opposed the U.S. export controls, saying that they would merely force China to develop its own chip ecosystem instead of building around U.S. standards.
Nvidia was told earlier this year that it could no longer sell its H20 chip to China, a restriction that the company said this week would cause it to miss out on about $8 billion in sales in the current quarter. The H20 chip was specifically designed by Nvidia to comply with 2022 restrictions, but the Trump administration said in April that the company needed an export license. Nvidia said it was left with $4.5 billion in inventory it couldn’t reuse.
“The U.S. has based its policy on the assumption that China cannot make AI chips,” Nvidia CEO Jensen Huang told investors on the company’s earnings call. “That assumption was always questionable, and now it’s clearly wrong.”
The Trump administration did rescind an expansive chip export control rule that was implemented by the Biden administration called the “AI diffusion rule,” which would have placed export caps on most countries. A new and simpler rule is expected in the coming months.
WATCH: AI trade remains work in progress
