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US Orders Nvidia to Stop Sale of Advanced Chips to China

US officials tell California chip designer to stop exporting two top chips to China used for artificial intelligence, machine learning, satellite imagery and other purposes

The logo of technology company Nvidia is seen at its headquarters in Santa Clara
The logo of tech firm Nvidia is seen at its headquarters in Santa Clara, California. Photo: Reuters


Chip designer Nvidia Corp said on Wednesday US officials have told it to stop exporting two top computing chips to China that are used for artificial intelligence and machine learning – and military purposes.

The move, which caused the group’s shares to drop 6.6%, could hinder Chinese companies’ ability to carry out advanced work like image recognition and hamper Nvidia’s business in China.

The company said the ban, which affects its A100 and H100 chips designed to speed up machine learning tasks, could interfere with completion of developing the H100, the flagship chip Nvidia announced this year.

Shares of Nvidia rival Advanced Micro Devices also fell 3.7% in after hours trading. An AMD spokesman said the company had received new license requirements that will stop its MI250 artificial intelligence chips from being exported to China but it believes its MI100 chips will not be affected.

AMD said it does not believe the new rules will have a material impact on its business.

Nvidia said US officials told it the new rule “will address the risk that the covered products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China.”

Asked for comment, the US Department of Commerce would not say what new criteria it has laid out for AI chips that can no longer be shipped to China but said it is reviewing its China-related policies and practices “keep advanced technologies out of the wrong hands.

“While we are not in a position to outline specific policy changes at this time, we are taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and end-users to protect US national security and foreign policy interests,” a spokesperson said.

The news signals a major escalation of the US crackdown on China’s technological capabilities as tensions bubble over the fate of Taiwan, where chips for Nvidia and almost every other major chip firm are manufactured.


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Military Uses

Without American chips from companies like Nvidia and AMD, Chinese organizations will be unable to cost-effectively carry out the kind of advanced computing used for image and speech recognition, among many other tasks.

Image recognition and natural language processing are common in consumer applications like smartphones that can answer queries and tag photos. They also have military uses such as scouring satellite imagery for weapons or bases and filtering digital communications for intelligence-gathering purposes.

Nvidia said it had booked $400 million in sales of the affected chips this quarter to China that could be lost if Chinese firms decide not to buy alternative Nvidia products. It said it plans to apply for exemptions to the rule but has “no assurances” that US officials will grant them.

Stacy Rasgon, a financial analyst with Bernstein, said the disclosure signaled that about 10% of Nvidia’s data centre sales, which investors have closely monitored in recent years, were coming from China and that the hit to sales was likely “manageable” for Nvidia.

“It’s not (investment) thesis changing, but it’s not a good look,” Rasgon said. “What happens on both sides now is the question,” he said about possible escalations going forward.

The chip ban comes as Nvidia last week already forecast a sharp drop in revenue for the current quarter on the back of a weaker gaming industry. Nvidia said it expected third-quarter sales of $5.90 billion, down 17% from the same period last year.

News of the move did not please Beijing.

Preventing the sale of advanced chips to China undermined the legitimate rights and interests of Chinese companies and the stability of global industrial and supply chains, Commerce Ministry spokesperson Shu Jueting told a regular news conference on Thursday.


  • Reuters with additional editing by Jim Pollard

NOTE: This report was updated on Sept 1, 2022 to include China’s response to the US move.




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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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