China’s Alibaba can’t buy advanced Arm chips because of US and UK export controls

Chinese ecommerce giant Alibaba is unable to purchase Arm’s most advanced chip designs due to US and UK export controls. The Financial Times reports that Arm has concluded that its latest Neoverse V series chip designs can’t be sold to Alibaba because the US and UK wouldn’t approve the sale and provide licenses to export the chip designs to China.

The US introduced sweeping restrictions on chip sales to China in October, meant to impair Beijing’s military and technological capabilities. Manufacturers like Intel and Micron have to obtain a license from the US Commerce Department to export chip-making equipment and semiconductors to Chinese companies, and the UK has followed with similar export restrictions.

Arm, owned by Japanese investor SoftBank, is based in Britain, and is unable to sell its advanced chips due to the Wassenaar Arrangement, an export control arrangement that was first established in 1996 and involves 42 countries. In a statement to the Financial Times, Arm says it can’t sell the chip designs to China because they’re classified as “US origin” technology that falls under Wassenaar.

Chinese companies may fall behind in cloud computing and machine learning

Chinese companies have been unable to purchase Arm’s Neoverse V1 and V2 chip designs, hindering performance for cloud computing and machine learning. Amazon Web Services (AWS) EC2 instances already include Arm Neoverse V1 chip designs, allowing US companies to benefit from performance improvements.

These export controls will seriously hinder China’s ability to build leading chips, and come years after Arm was first forced to cut ties with Huawei due to a US trade ban. You still can’t purchase Huawei phones in the US, despite China manufacturing many of the phones that US consumers use daily.

Recent reports have suggested that Japan and the Netherlands have also agreed to join the US and UK in tightening controls on chip manufacturing machinery to China. The controls on chip manufacturing equipment exports to China also follow months of investment by the US in domestic chip manufacturing. President Joe Biden signed a $280 billion CHIPS and Science Act in August, with subsidies designed to boost chip manufacturing in the US.

Intel broke ground on its new $20 billion semiconductor plant in September, one of the first domestic chip-making facilities to come out of the CHIPS and Science Act. It’s part of bigger plans from Intel to invest $100 billion in Ohio over the next 10 years. More recently, President Biden joined Tim Cook to celebrate production equipment arriving at TSMC’s first fab in Arizona, scheduled to begin making advanced chips for Apple and others in 2024, before adding a new site in 2026.

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