Eight of China's artificial intelligence (AI) companies just got added to the US trade blacklist last week that prevented them from buying US technology with the reason the US' Department of Commerce's Bureau of Industry and Security says is human rights violations.
When leading AI firms from the mainland attended Nvidia's annual GPU Technology Conference in Silicon Valley on March 2018, the organizer told them to distance themselves from the California-based leading maker of graphics chips (GPUs) for gaming because the trade situation between US and China is growing.
One of the attendees from China confirmed that they were asked: "to pull press releases" that indicate an association with Nvidia.
He also added feeling that "chill" and of the immediate need of coming up with a plan to prepare for the worst the moment they return to Beijing.
China and the US are competing for global supremacy in AI and as a result, a number of Chinese companies came to prominence outside its domestic market.
The newly-added blacklisted companies in the so-called Entity List are facial recognition start-ups Megvii Technology, SenseTime Group and Yitu Technology, video surveillance specialists Dahua Technology and Hangzhou Hikvision Digital Technology and AI champion iFlyTek, Xiamen Meiya Pico Information Co and Yixin Science and Technology Co.
Charlie Dai, a Beijing-based principal analyst at Forrester Research said that the business portfolio of these eight AI firms is software and solutions only and the extent of what they can do is limited.
He added that it is difficult to source alternatives for the hardware that these AI companies need like chipset design software, FPGAs, GPU s and sensors.
FPGA (field-programmable gate array) is an integrated circuit (IC) that cannot be programmed right after manufacture and is only programmable right in the field.
AI startup Megvii 's chief executive and co-founder Yin Qi said that the ban was a "challenge" and already begun to diversify the company's suppliers as early as May when Huawei got blacklisted on grounds of national security.
When it comes to GPUs, domestic suppliers have been around but so far been unable to compete with AMD and Nvidia.
According to investment bank and financial services company Jefferies, China's top surveillance camera provider Hikvision Digital Technology can find replacements for its cameras and storage devices from domestic and Japanese vendors.
Huang Fanghong, Hikvision's board secretary, said that the company will replace chips they don't have access to and if they can't, they will change components.
He also added that they are ready to redesign the company's products or create their own chips.
