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Intel Forced to Suspend Sales to Inspur, China’s Largest AI and Server Vendor

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Intel has been ordered by the US government to cease product shipments to the largest server company you’ve probably never heard of. Inspur isn’t quite as large as Dell or HPE, but it’s the third-largest server manufacturer in the world, with 11.7 percent of the global market in Q3 2019. The company is the largest server provider in mainland China.

Intel has halted shipments to Inspur but has stated it expects shipments to resume in about two weeks, according to GlobalTimes.cn. “Intel has temporarily paused shipments to this one customer in order to make a few changes to our supply chain as required by US law,” the company said in a statement.

Image released by Inspur, data via IDC

According to a list released by the Pentagon last week, Inspur is one of 20 companies claimed to be owned or controlled by the Chinese military. The military was required to release a list of Chinese companies affiliated with the People’s Liberation Army in 1999, but never actually published a list until 2020.

“As the People’s Republic of China attempts to blur the lines between civil and military sectors, ‘knowing your supplier’ is critical,” Pentagon spokesperson Jonathan Hoffman told Bloomberg. “We envision this list will be a useful tool for the U.S. government, companies, investors, academic institutions, and like-minded partners to conduct due diligence with regard to partnerships with these entities, particularly as the list grows.”

According to Bloomberg’s story last week, the list was expected to be mostly symbolic, with several quoted commenters questioning whether the government would require US companies to cease selling equipment to the affected corporations. Obviously, there’s intended to be some teeth to the enforcement, which raises the question of how Intel will be able to resume shipments so quickly. AMD, if you recall, was notified that its THATIC venture had run afoul of national security and does not appear to have reactivated the business partnership since that determination.

China has long pursued a goal of developing dual-use capabilities for technology as part of its civil-military integration program. This sounds conceptually similar to US requirements that our own military use off-the-shelf components when possible to reduce cost, but Bloomberg notes that the policy allows China to purchase tech it might otherwise not be able to obtain.

It’s possible that Intel will be allowed to resume shipments after tweaking its supply lines, as implied, or that it will be able to sell certain chips to China but not others. In theory, the US government could attempt to sanction Inspur in terms of which CPUs it’s allowed to buy, or attempt to segment it by technology, allowing standard CPUs but not FPGAs or AI accelerators. The proposed remedies will depend on what the problems are in the first place.

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