The expression "Jungkkeolma (the important thing is an unwavering spirit)" was a trend this year. This expression, which took the sports world by storm, now finds its meaning in the tense tug-of-war between the United States, a technological powerhouse trying to curb China's rise in the next-generation cutting-edge industry, artificial intelligence (AI), and China, an underdog determined to remain unwavering.

On the 16th, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) placed 36 Chinese and Japanese companies on the Entity List for supporting China's military modernization or engaging in human rights abuses. Given that these Japanese companies are Japanese subsidiaries of China's state-owned semiconductor company Yangtze Memory Technology (YMTC), all 36 companies are clearly targeting Chinese companies.

In particular, the EL list this time includes 21 AI-related companies, including Chinese AI semiconductor company Cambricon Technology, which is expected to cause disruption to China's AI semiconductor development. These companies were subject to strong sanctions, including a ban on exports of US-made software, equipment, and technology, using the Foreign Direct Product Rules (FDPR) to produce their products.

Cambricon, dubbed China's AI semiconductor unicorn, garnered attention with a spectacular debut on the Chinese stock market in 2020. With the goal of becoming China's equivalent of NVIDIA, Cambricon's 1A chip is used in deep learning processors for edge AI, while its 1H and 1M chips have been adopted by over 100 million mobile devices and servers, powering Huawei's latest smartphones and Alibaba's servers.

Cambricon's aggressive growth can also be seen in its patent applications. According to the Patent Office, the U.S. has been the top country in terms of patent applications related to AI accelerators, with 2,255 applications, or 45%, filed over the past 10 years, followed by China with 1,156 applications, or 23%.

When looking at a single company, Intel had the most cases with 438 cases over the 10 years from 2011 to 2020, followed by Samsung with 272 cases, Cambricon with 262 cases, IBM with 158 cases, and Google with 151 cases, making up the top five.

Park Jae-il, head of the Artificial Intelligence and Big Data Examination Division at the Korean Intellectual Property Office, said, “The importance of ‘AI accelerators’ that enable AI to learn and reason quickly is increasing, and the competition to secure technological leadership will also become fierce,” adding, “There is a need to secure innovative core patents for AI accelerators, which are the underlying technology.”

Most of Cambricon's patents are based on domestic Chinese patents. Although this EL listing preemptively blocks Cambricon's global market expansion, the overwhelming domestic market in China alone provides sufficient demand, giving Cambricon ample momentum for AI technology development.

SenseTime, already considered China's leading AI software company, successfully completed its initial public offering (IPO) on the Hong Kong Stock Exchange in 2019 despite being listed on the EL List and an investment ban that came into effect in February 2022. SenseTime, which boasts world-class facial recognition technology, is attempting to sustain its growth by expanding into product and component defect detection in industries such as the automotive industry. Some argue that SenseTime is attempting to offset the effects of sanctions by leveraging its competitive technology and domestic market presence.

Ellen Estevez, the U.S. Under Secretary of Commerce for Industry and Security, explained the reasoning behind the sanctions list, saying, “To protect our national security, we want to strictly limit China’s ability to use powerful, commercially available technologies, such as AI and advanced computing, to modernize its military and abuse human rights.”