Nvidia, the world’s largest maker of artificial intelligence (AI) chips, is at the heart of a new round of U.S. tech sanctions targeting China and Russia.
Nvidia noted in a filing to SEC that the US government had imposed new export restrictions on two of its most advanced AI chips to China, its second-largest market after Taiwan, making up 26% of its revenues in 2021.
The ban could cost Nvidia as much as $400 million in potential sales to China in the third quarter, the firm said.
The U.S. government said the move “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 and Russia.” But the ban is in fact harming a wide array of businesses and organizations using the silicons beyond military uses.
The two chips in question are the Nvidia A100 and H100 graphic processing units. A100 is designed to provide high-performance computing, storage and networking capabilities for industries spanning healthcare, finance and manufacturing, explains Chinese e-commerce and cloud computing giant Alibaba, a user of A100.
H100 is the firm’s upcoming enterprise AI chipthat is expected to ship by the end of this year and has part of its production done in China.
Nvidia’s engagement with China won’t be completely severed. The U.S. government has granted permission for Nvidia to keep manufacturing H100 in China, Nvidia said in another filing, though access by Chinese customers will still be restricted.
The ban is “sci-tech hegemony”, snapped China’s foreign ministry spokesperson Wang Wenbin in a regular press conference on Thursday. “The US seeks to use its technological prowess as an advantage to hobble and suppress the development of emerging markets and developing countries.”
The U.S.’s move to bar China’s access to its high-end technologies has in turn accelerated the latter’s pursuit of independence. Huawei has been doubling down on smartphone chip development ever since Washington put it on an export blacklist over national security concernsin 2019. A swathe of domestic semiconductor startups is netting hefty investments from VCs and government-guided funds.
While China may still be a generation behind in producing the most sophisticated chips, the country is gradually sharpening its edge in lower-end, specialized semiconductors, such as neural processing units that give phone cameras a boost. It remains to be seen what ripple effect the Nvidia ban will create.