The US is proposing new rules to govern the use of cloud computing services. Credit: Blackboard.

The Biden administration is gearing up to place restrictions on Chinese companies’ access to US cloud-computing services, the Wall Street Journal reported.

If adopted, the rule may mean US cloud-service providers including Amazon and Microsoft will need government permission to provide cloud computing services which use advanced AI chips, to Chinese customers, according to the Wall Street Journal.

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Meanwhile, China has said it would apply export controls to some metals commonly used in the semiconductor industry.

Having already placed sanctions on chips companies operating from China, the US risks straining already tense trade relations between the two countries.

Cloud computing services allow customers to access advanced computing capabilities without the need to purchase high-tech equipment on the US export control list, such as chips.

National-security analysts have warned that Chinese AI companies could have found a loophole in order to bypass the current export control rules by using cloud services. The restrictions are viewed as a way to solve this issue.

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In fact, the new policy will affect companies that don’t deal with semiconductors or manufacture equipment, including US cloud service providers Amazon Web Services and Microsoft’s Azure. Both companies that are expected to be hit hard by the updated controls due to their presence in the Chinese market.

The final and upgraded regulations will be unveiled by the US Commerce Department in the coming weeks, in a continuation of the expansion of its semiconductor export control policy, which was first introduced in October 2022.

The final upgraded regulations will include the full scope of restrictions on artificial intelligence chips, including those made by NVIDIA, the Wall Street Journal reported.

The new policy is expected to see the US unify the list of controlled chipmaking equipment with the Netherlands and Japan.

On Friday (June 30) the Netherlands announced new restrictions on the export of advanced semiconductor equipment. The Dutch government said the rules would require companies that deal in semiconductor manufacturing to seek a licence prior to exporting it.