The US government has ordered Nvidia, a chip designer, to immediately halt the export of some of its high-end artificial intelligence chips to China. The new restrictions bar exports of Nvidia’s advanced AI chips, designed for the Chinese market, to comply with earlier export regulations.
Background
In October 2022, President Joe Biden’s administration announced measures to block countries, including China, Iran, and Russia, from buying high-end AI chips designed by Nvidia and others.
The move was seen as an attempt to close loopholes that became apparent after an initial wave of chip controls last October. The US Department of Commerce released a set of new semiconductor export restrictions on October 18, 2023.
These restrictions tightened definitions for advanced AI chips and added preventive measures. These measures include additional licensing requirements for shipments to over 40 countries. This is to avoid any form of resale to China.
Nvidia’s Response
At the moment, there is no comment from Nvidia regarding the timeline change. The original timeline says the restrictions will take effect 30 days from 17 October.
Nvidia said in a statement to the US Securities and Exchange Commission (SEC), that the restrictions were “effective immediately”. However, it adds that “given the strength of demand for the Company’s products worldwide, the Company does not anticipate that the accelerated timing of the licensing requirements will have a near-term meaningful impact on its financial results”.
In an 8K filing released on October 23, 2023, Nvidia advised that it had received notice from the US Government. The notice states that the rules governing the sale of AI chips to China were “effective immediately.
This rule impacts the shipments of the company’s A100, A800, H100, H800, and L40S products”. The company thought it had 30 days to get the last few orders out the door. But it was wrong. The restrictions on the export of high-performance AI accelerators to China have already gone into effect.
California-based Nvidia has come to dominate the market for chips used in AI systems. The halt in exports of some of its high-end AI chips to China will significantly impact the company’s revenue.
This move will most likely have a broader impact on the technology industry. It is part of a broader effort by the US government to limit China’s access to advanced technology.
China’s Response
There is no public statement from China about Nvidia’s announcement. However, when the new restriction hit the public last week, it hit back at the Biden administration. China’s foreign minister said this “violates the principles of the market economy and fair competition”.
