How China is circumventing US chip sanctions

The US government is reportedly considering capping AI chip sales to certain countries. The move would affect chipmakers like Nvidia (NVDA) and Advanced Micro Devices (AMD). Macrolens founder, chief strategist, and managing principal Brian McCarthy joins Seana Smith on Catalysts to discuss the potential export rules and how they could affect the global artificial intelligence (AI) race. “It's unclear whether yesterday's news suggesting there could be tightened restrictions on the UAE and Saudi Arabia is or isn't related to those countries possibly funneling chips to China because it's very hard to sort of bottle up China's access to these chips through third parties,” McCarthy tells Yahoo Finance. He explains that despite the US limiting chip exports to China due to national security risks, widespread smuggling of the tech persists. Due to chip smugglers, “There are many, many holes in this net,” McCarthy says, adding the US government’s export rules are doing something as “clearly the cost of accessing these chips has gone up for Chinese entities, but the net has a lot of holes in it, and it's really unclear how effective these controls are slowing China's ambitions in the AI and other related spaces.” The strategist says beyond the effectiveness of the rules of keeping the chips out of China another question is how much national defense prerogatives “are tied up in the economic race.” He adds, “That’s really unclear to what extent each of those factors is driving US policy at this point. Clearly, AI has a lot of applications in defense that it's important that each side feels it's important that they have access to. As far as the economic stuff goes, it’s interesting to speculate as to whether that may change.” “I know [China is] behind in chips, and [the US will] continue to move forward." McCarthy says, adding “it is a question of whether there's justification on economic grounds to be trying to halt the advancement of any country that's just trying to build businesses.” McCarthy notes his view that the US doesn’t “really need to go out of our way to halt China's economic advancement. They have plenty of domestic problems that they are contending with at this point.” #youtube #ai #yahoofinance About Yahoo Finance: Yahoo Finance provides free stock ticker data, up-to-date news, portfolio management resources, comprehensive market data, advanced tools, and more information to help you manage your financial life. - Get the latest news and data at finance.yahoo.com - Download the Yahoo Finance app on Apple (https://apple.co/3Rten0R) or Android (https://bit.ly/3t8UnXO) - Follow Yahoo Finance on social: X: http://twitter.com/YahooFinance Instagram: https://www.instagram.com/yahoofinance/?hl=en TikTok: https://www.tiktok.com/@yahoofinance?lang=en Facebook: https://www.facebook.com/yahoofinance/ LinkedIn: https://www.din.com/company/yahoo-finance