U.S. Expands Export Restrictions on Nvidia AI Chips Beyond China
In a regulatory filing this week, Nvidia (NVDA.O) announced that the U.S. has expanded the restriction of exports of its sophisticated artificial-intelligence chips to regions beyond China, including some countries in the Middle East. The move comes as the U.S. government typically imposes export controls for national security reasons.
Last year, a similar announcement signaled an escalation of the U.S. crackdown on China’s technological capabilities. However, it is unclear at this time what risks are posed by exports to the Middle East.
Nvidia stated that these new curbs would not have an immediate material impact on its results. In a separate statement, the company also mentioned that the new licensing requirement would not significantly affect a meaningful portion of its revenue. Nvidia is currently working with the U.S. government to address this matter.
The U.S. Commerce Department, which usually administers new licensing requirements, has not yet commented on this development.
Last September, Nvidia’s rival Advanced Micro Devices (AMD.O) also received new license requirements that would halt exports of its artificial-intelligence chips to China.
Since then, Nvidia along with AMD and Intel (INTC.O) have all disclosed plans to create less powerful AI chips that can be exported to the Chinese market.
It should be noted that Nvidia did not specify which countries in the Middle East would be affected by these restrictions. The company derives most of its sales from the United States, China, and Taiwan, with approximately 13.9% of sales coming from other countries combined.
Nvidia stated in the regulatory filing that during the second quarter of fiscal year 2024, the U.S. government informed them of an additional licensing requirement for a subset of A100 and H100 products destined to certain customers and regions, including some countries in the Middle East.
Tensions over the fate of Taiwan, a major manufacturing hub for chips, have played a role in these announcements. In October 2022, the Biden administration published a sweeping set of export controls, including a measure to cut off China from certain semiconductor chips made anywhere in the world with U.S. equipment. Japan and the Netherlands also implemented similar rules earlier this year.
Without American AI chips from companies like Nvidia and AMD, Chinese organizations will no longer be able to cost-effectively carry out advanced computing tasks such as image and speech recognition.
Image recognition and natural language processing, which are common in consumer applications like smartphones, also have military uses such as analyzing satellite imagery and filtering digital communications for intelligence purposes.
Reporting by Jasper Ward in Washington, and Ismail Shakil in Ottawa and Stephen Nellis in San Francisco
Editing by Chris Sanders, Nick Zieminski, Matthew Lewis, and Lincoln Feast.
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