US government wants NVIDIA to stop selling its GPUs to China and Russia

NVIDIA has found themselves on the receiving end of a rude shock when earlier this week, they revealed that the US government is taking action to prevent them from selling their A100 Tensor Core GPU and the upcoming NVIDIA H100 Tensor Core GPU. With these graphics cards used for high level artificial intelligence work, the US government wants to ‘keep advanced technologies out of the wrong hands’.

In a US Securities and Exchange Commission filing by NVIDIA, it was noted that the US government has imposed a new license requirement effective immediately before NVIDIA can export them to either China or Russia. This license will also cover any future NVIDIA integrated circuits that can perform as well as the A100 Tensor Core GPU.

H100
A100

The idea behind needing a license from the US government seems to be a preventive measure to address the risk of these GPUs being used for ‘military’ reasons. However, it will also affect Chinese firms doing work into AI and deep learning models. It should be noted though that NVIDIA has already pulled out of Russia, so the new license requirements from the US government will almost fully affect China only.

Furthermore, NVIDIA believes that this new license requirement may impact its ability to finish development of the still unreleased H100 Tensor Core GPU in a timely manner, and could also affect its support of the existing customers using the A100 Tensor Core GPU. It might even be forced to move its operations out of China. They have however began reaching out to their customers in China, informing them of the situation and helping them secure purchases of NVIDIA’s products that aren’t subject to the license requirement, as well as considering seeking licenses for customers who do require one of these AI GPUs.

Unsurprisingly, this news has hampered NVIDIA’s shares in the market too. In the SEC filing, NVIDIA notes that they their original outlook for the third fiscal quarter included approximately USD400 million in sales to China, which considering the new licensing requirement, might be significantly impacted if Chinese customers aren’t willing to purchase other NVIDIA GPUs that aren’t covered by the license. NVIDIA shares ended up tanking hard, dropping from USD151.49 per share to as low as USD133.13 per share yesterday.

The Chinese government has since responded too, with the Chinese foreign ministry calling it a ‘tech blockade’ by the US. The Chinese commerce ministry meanwhile says that the new license requirement will affect the stability of the global supply chain.

“The U.S. continues to abuse export control measures to restrict exports of semiconductor-related items to China, which China firmly opposes,” – Shu Jieting, commerce ministry spokesperson

NVIDIA wasn’t the only one hit by the US government’s new license requirements too. AMD also found themselves caught in the crossfire, with the new license rules preventing them from exporting their own MI250 AI GPU. They don’t believe it’ll be a huge hit on their business though, as their other MI100 AI GPU isn’t affected.

[ SOURCE 2 ]

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