The U.S. Commerce Department is reportedly readying new rules that would restrict American cloud providers from selling certain services to customers in China.

The Wall Street Journal reported the development today, citing people familiar with the matter. The new sales curbs are expected to roll out within weeks. The report comes a few days after China imposed export restrictions on gallium and germanium, two metals that are widely used in semiconductor manufacturing. 

The Journal’s sources said that the upcoming Commerce Department rules will apply to cloud services powered by artificial intelligence chips. Services from Amazon Web Services Inc. and Microsoft Corp., the two largest players in the cloud market, will reportedly be among the affected offerings. It’s believed providers will have to seek government permission before they can sell the services covered under the upcoming rules to customers in China. 

AWS and the other major cloud providers offer numerous compute instances powered by AI-optimized chips. Many of those instances run on Nvidia Corp. graphics processing units. Some major providers also offer instances powered by AI chips from Advanced Micro Devices Inc. and Intel Corp.’s Habana unit, but those products are used to a lesser extent than Nvidia silicon.

Alongside GPUs sourced from third-party suppliers, AWS and Google LLC also use internally developed silicon. Google Cloud offers instances powered by a homegrown line of AI chips known as the TPU series. AWS, meanwhile, has developed not one but two sets of custom AI chips: the AWS Trainium series for training neural networks and the AWS Inferentia series for performing inference to run those neural network models.

The new rules the Commerce Department will reportedly apply to cloud services powered by AI chips would follow a related set of export restrictions introduced last year. Those restrictions banned Nvidia and AMD from selling their most advanced AI-optimized graphics cards to customers in China.

Following the introduction of the curbs, Nvidia developed slower versions of its two fastest data center GPUs. Those slower versions, which are known as the A800 and the H800, don’t meet the performance threshold necessary for the export restrictions to apply. Last week, the Journal reported that the Commerce Department is considering expanding the curbs to cover the A800 and H800.

The current export restrictions encompass not only AI chips but also other technologies. Those technologies include many types of semiconductor manufacturing equipment. 

The Commerce Department has banned companies from supplying customers in China with tools that can be used to make processors based on the FinFET architecture, a type of widely used transistor design. Tools needed for the production of advanced DRAM and flash chips are also covered by the rules. Furthermore, the Commerce Department has restricted the sale of certain components that can be used to make semiconductor manufacturing equipment.

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