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Title: US Restrictions on Exporting AI Chips to China Pose Challenges for NVIDIA and AMD
In a recent development, the US government has implemented restrictions on the export of AI chips to China, affecting leading technology companies NVIDIA and AMD. Both companies have confirmed the new license requirement imposed by the US authorities, which now prohibits the sale of their most advanced hardware, including GPUs and data centers, to customers based in China.
NVIDIA, in a filing with the Securities and Exchange Commission (SEC), disclosed that the measure specifically targets GPUs A100 Y H100, widely used for machine learning and image recognition tasks. The restriction also extends to equipment incorporating these components, such as NVIDIA DGX data centers. Similarly, AMD has stated that the US determination impacts its accelerators Instinct MI250, while its AI chips MI100 are not covered by the new export parameters.
While the decision became public recently, the companies were notified about it last week. The license requirement now mandates that NVIDIA and AMD seek approval from the US government before selling their products to certain customers in China. As a result, the authorities have the power to reject commercialization when they deem it necessary, thereby curtailing the companies’ business operations in the country.
The US government cites concerns over the potential misuse and militarization of artificial intelligence chips as the primary motivation behind the restriction. By imposing this measure, they aim to mitigate the risk of such chips being used for military purposes or being diverted to military users.
China has expressed its discontent regarding the move, with Shu Jueting, the Chinese Minister of Commerce, publicly stating that it undermines the legitimate rights and interests of Chinese companies and disrupts the stability of global industrial and supply chains.
There are three major concerns raised by NVIDIA due to the blocking of AI chip exports to China. Firstly, the company estimates that its businesses in China generated $400 million in revenue during the last quarter, which is now at risk due to the inability to continue normal business operations. Secondly, the restriction could potentially impact the development of the H100 GPU, which was announced earlier this year. However, the United States has granted permission for necessary exports to ensure the uninterrupted progress of the chip’s development.
Thirdly, since the decision also extends to Hong Kong, NVIDIA may need to relocate some of its operations out of China. As a temporary measure, they have been allowed to fulfill A100 and H100 orders placed in Hong Kong until September 1, 2023.
These developments present significant challenges for NVIDIA and AMD, forcing them to reevaluate their business strategies in China and find alternative solutions to mitigate the impact of the export restrictions. As the US-China trade tensions continue, the technology industry is likely to face further uncertainties and disruptions in the global market.
In conclusion, the US government’s new restrictions on the export of AI chips to China have major implications for NVIDIA and AMD. The move aims to address concerns regarding the militarization of such chips. While China has voiced its dissent, the companies now face the challenge of adapting to the limitations imposed on their business operations and exploring new avenues to sustain their growth and presence in the Chinese market.
