"Washington, October 17: The US government has taken measures to limit China's access to advanced chips for utilization in Artificial Intelligence (AI). This adds to the restrictions initiated in October aimed at curbing China's progress in supercomputing and AI, crucial fields of global research. The US is apprehensive that China might repurpose AI chips for military applications.

The Joe Biden administration announced on Tuesday additional limitations on the sale of advanced semiconductors by American firms, building upon the restrictions implemented last October to slow down China's advancements in supercomputing and artificial intelligence, as reported by The New York Times.

The new regulations will discourage US companies from exporting or selling advanced semiconductors from the US to Chinese data centers, known for utilizing them to develop AI-capable models. US companies are now required to obtain either a special license or inform the government beforehand when seeking to sell advanced chips or the machinery required for their production to China.

In an effort to monitor third-country exports of such advanced semiconductors from US companies, the Biden administration has mandated chip manufacturers to obtain additional licenses for shipping to numerous other countries subject to US arms embargoes, as mentioned by the NYT.

The Biden administration's restrictive directives are rooted in concerns that China's access to such advanced technology poses a threat, enabling the country to bolster its military arsenal by developing guided hypersonic missiles, setting up advanced surveillance systems, or cracking top-secret US codes.

Prominent AI experts have cautioned that unregulated use of this technology could pose existential threats to humanity.

However, AI also holds significant commercial potential, and the stricter restrictions may impact Chinese companies striving to develop AI Chatbots, such as ByteDance (parent company of TikTok) and the internet giant Baidu, industry analysts noted.

Over the long term, these restrictions may also weaken China's economy, given that AI is reshaping industries from retail to healthcare, reported The Times.

Nvidia, a leading US chipmaker, could witness a significant impact on its sales due to the new US government order.

Other prominent chip manufacturers like AMD and Intel may also experience drops in sales in the export market and a decline in revenues, affecting their stock value, given China's importance as a major export base for them.

Some chip makers derive up to a third of their revenue from Chinese buyers and have been actively lobbying against tighter restrictions in recent months.

The Global Race for Computer Chips: Anticipating a renewed crackdown on semiconductor technology sales to China by the Biden administration, three of the world's largest chip makers aggressively campaigned to safeguard their businesses.

South Korea, a crucial US ally with a semiconductor sector heavily reliant on China, finds itself caught between Beijing and Washington in their technology-driven trade war.

SoftBank is betting on Arm, the British chip designer it acquired in 2016, to capitalize on the AI revolution. Arm's initial public offering is the largest this year.

India, capitalizing on the global intent to reduce dependence on China, aspires to build a semiconductor manufacturing industry from the ground up, a bold yet challenging ambition, according to opinions from US semiconductor makers.

US officials clarified, however, that the new restrictions would exclude chips manufactured solely for commercial applications, like smartphones, laptops, electric vehicles, and gaming systems. Most of these rules will be enforced in 30 days, with some taking effect sooner, as reported.

In a statement, the Semiconductor Industry Association, representing major chip makers, stated that it was assessing the impact of the updated rules.

"We recognize the need to protect national security and believe maintaining a healthy US semiconductor industry is an essential component in achieving that goal," the group remarked.

The Biden administration has been actively countering China's increasing expertise in cutting-edge technologies by investing in new chip factories in the US. It has adopted a strategy of setting strict guidelines and narrow restrictions on the export of technology to China with potential military applications while keeping other trade relatively unrestricted.

US officials describe this strategy as safeguarding American technology with "a small yard and a high fence."