Nvidia, the world’s largest maker of artificial intelligence chips, is at the center of a new round of US tech sanctions targeting China.
Nvidia noted in a filing with the SEC that the US government had imposed new export restrictions on two of its most advanced AI chips to China, its second largest market after Taiwan. 26% of its revenue in 2021.
The ban could cost Nvidia up to $400 million in potential sales to China in the third quarter, the company said.
Export Controls also prohibit Nvidia from shipping the chips to Russia, although the company said it does not currently sell in the country.
The U.S. government said the move “will address the risk of covered products being used or diverted to a ‘military end-use’ or ‘military end-user’ in China and Russia.” But the ban is in practice to crimp a wide range of companies and organizations using the silicones beyond military uses.
The two chips in question are the Nvidia A100 and H100 graphics processors. A100 is designed to provide high-performance computing, storage and networking capabilities for healthcare, finance and manufacturing, Explain Chinese e-commerce and cloud computing giant Alibaba, a user of the A100.
H100 is the next enterprise AI chip which should be shipped by the end of this year and part of the production of which is carried out in China.
Nvidia’s engagement with China will not be completely severed. The US government has allowed Nvidia to continue manufacturing the H100 in China, Nvidia said in another depositalthough access for Chinese customers will still be limited.
The ban is “the hegemony of science-technology,” Chinese Foreign Ministry spokesman Wang Wenbin said in a regular press conference Thursday. “The United States seeks to use its technological prowess as an advantage to impede and suppress the development of emerging markets and developing countries.”
The decision of the United States to deny China access to its advanced technologies has in turn accelerated the latter’s quest for independence. Huawei has doubled down on smartphone chip development since Washington blacklisted it for export on national security grounds in 2019. A slew of domestic semiconductor startups are making huge investments from VCs and government-guided funds.
While China may still be a generation behind in producing the most sophisticated chips, the country is steadily building its edge in low-end specialty semiconductors, such as neural processing units that kickstart thumb to the cameras of the phones. It remains to be seen what ripple effect Nvidia’s ban will create.