Nvidia responds to potential US chip limitations for Beijing.
Nvidia Downplays U.S. Chip-Export Restrictions to China
Nvidia is downplaying possible U.S. chip-export restrictions to China by the Biden administration.
The Wall Street Journal reported on June 27 that the White House was mulling even more restrictions on artificial intelligence (AI) chip exports to China.
A potential chip ban could affect Nvidia’s status as the world’s leader for the graphics processors needed to build AI software like ChatGPT.
Nvidia’s latest A100 and H100 chips are highly desired by tech firms around the world to build advanced AI systems.
The U.S. Department of Commerce might stop chip shipments by Nvidia and other manufacturers to customers in China as early as July, the report said.
Commerce Department Pressures Tech Firms to Halt Advanced Chip Exports to China
The White House is increasingly concerned that the company’s technology could be used for military or espionage purposes by the Chinese Communist Party (CCP).
Nvidia, Micron, and AMD are the chipmakers most affected by the escalating tensions between Beijing and Washington, and they may take a multibillion-dollar hit.
- The United States had already persuaded the top chip equipment manufacturers of the Netherlands and Japan to join its policy on curbing technological access to Beijing.
- On the other hand, the Biden administration allowed chip makers in South Korea and Taiwan to continue operating and expanding their existing plants in China that produce older and less advanced chips.
The Commerce Department ordered the San Jose, California-based tech giant last September to stop exporting two advanced computer chip models for AI work to China.
The American embargo on exports of advanced microchips to China went into effect in October 2022, as the company saw its data-center chip added to the export control list.
Last November, Nvidia CEO Jensen Huang announced that the firm was offering a new advanced chip called the A800 to China that was lower performing and met export control rules.
The tech company later tweaked its flagship H100 chip earlier this year to comply with new regulations.
However, the latest restrictions being considered by the government would even ban the sale of A800 chips without a special U.S. export license, reported The Wall Street Journal.
Chinese Chip Market Is One of the World’s Largest
China has been one of the largest markets for semiconductors for years.
Atif Malik, an analyst at Citi, wrote in a note that last year’s restrictions on China had a $400 million impact on sales, which could rise even higher due to increased demand for chips.
“We estimate China data center sales in the 5–10 percent range of total billion data center sales this year,” Malik said. “Overall, we believe AI demand will exceed supply this year and Nvidia can move its chips around.”
The new export rules are expected to have a negative effect on chip stocks, which witnessed a major investment boom in recent months due to the major advancements in AI technology.
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