Nvidia Latest Collateral Damage in US-China Tech War – TechCrunch
Nvidia, the world’s largest maker of artificial intelligence chips, is at the center of a new round of US technology sanctions targeting China.
Nvidia indicated in the SEC filing that the US government imposed new restrictions on the export of two of the most advanced artificial intelligence chips to China, including Hong Kong, its second largest market after Taiwan, where it accounted for 26% of its revenue in 2021.
The company said the ban could cost Nvidia up to $400 million in potential sales to China in the third quarter.
Export controls are also preventing Nvidia from shipping chips to Russia, although the company said it does not currently sell to the country.
The US government said the move would “address the risk of covered products being used or diverted to ‘military end-use’ or ‘military end-use’ in China and Russia.” In practice, however, the ban is crippling a wide range of companies and organizations that use silicon outside of military purposes.
The two chipsets in question are the Nvidia A100 and H100 GPUs. The A100 is designed to provide high-performance computing, storage and networking capabilities to industries including healthcare, finance and manufacturing, Chinese e-commerce and cloud computing giant Alibaba, an A100 user, explains.
H100 is the enterprise’s upcoming AI chip which is expected to ship by the end of this year and some of its production is made in China.
There is a positive side – Nvidia’s engagement with China will not be completely cut off. Nvidia later said the US government had given the company permission to continue manufacturing the H100 in China depositalthough purchases by Chinese customers will remain restricted.
The updated mandate also allows Nvidia to continue exporting the A100 to its US customers through data centers in China through March 1, 2023.
More ambiguous terms relate to the role of Hong Kong, which was included in the original ban. “The United States government has permitted the fulfillment of A100 and H100 orders and logistics services through the company’s Hong Kong facility until September 1, 2023,” the document reads. It is unclear if Chinese customers can access these chips via the former British colony.
The United States’ move to block China’s access to its advanced technologies has accelerated the latter’s pursuit of independence. Huawei has doubled down on smartphone chip development since Washington put it on an export blacklist due to national security concerns in 2019. A host of local semiconductor startups are making huge investments from venture capitalists and government-directed money.
While China may still be a generation behind in the production of more advanced chips, the country is gradually honing its edge in specialized minimally invasive semiconductors, such as neural processing units, aimed at bolstering phone camera capabilities.
The licensing requirement could also lead to a migration of Nvidia talent located in China, who will likely continue to work for local alternatives if they cannot move abroad. As the company noted in its filing, the ban “may require the company to move certain operations out of China.”
Taiwan’s TSCM, the world’s largest contract chip maker, will also lose out on export controls because it does a lot of manufacturing for Nvidia.
The Chinese government condemned the ban, which Foreign Ministry spokesman Wang Wenbin called “scientific and technological dominance” at a regular press conference on 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. This violates the rules of a market economy, undermines the international economic and trading system, and disrupts the stability of global industry and supply chains. China firmly rejects it.”
Updated with further analysis.