Nvidia and competitor AMD announced that the US is blocking them from selling chips for artificial intelligence products to China. Nvidia could lose $400 million this quarter.
Chip maker Nvidia revealed on Wednesday that US officials told the company to stop exporting two key computing chips destined for artificial intelligence projects to China. Competitor Advanced Micro Devices (AMD) is in the same situation.
According to Reuters, this measure may hamper the ability of Chinese companies to perform advanced tasks, such as image recognition, but also cause some difficulties for Nvidia’s business in China.
Nvidia shares are down nearly 6.6% after the announcement. The company said the ban could interfere with the completion of development of the H100, a chip announced by Nvidia this year.
Shares in Nvidia’s rival AMD tumbled 3.7%. A company spokesperson told the news outlet that the company has also received orders to prevent its MI250 artificial intelligence chips from being exported to China, but believes its MI100 chips will not be affected.
However, unlike Nvidia, AMD seems more optimistic as it expects the new rules not to have a big impact on their business.
Nvidia indicated that US officials said the new rule “will address the risk that products could be used or diverted for ‘military use’ in China.”
Questioned by Reuters, the US Commerce Department did not say what new criteria it has set so that artificial intelligence chips cannot be sold to China, but admitted it is reviewing its policies and practices.
“While we are not in a position to outline specific policy changes at this time, we are taking a comprehensive approach to implementing necessary additional actions related to technologies, end uses and end users to protect US national security and foreign policy interests,” he said. a department spokesperson to the news agency.
The announcement signals a major escalation of the US crackdown on China at a time when the fate of Taiwan, where chips for Nvidia and nearly every other major chip company are made, is uncertain.
Without American chips from companies like Nvidia and AMD, Chinese organizations will not be able to affordably perform the kind of advanced computing used for image and speech recognition, among many other tasks.
Nvidia revealed to have accounted for 400 million dollars (about 398 million euros) in sales of these semiconductors this quarter to China. Money could be lost if Chinese companies don’t want to buy other alternatives.
For that reason, the company plans to apply for exemptions from this lockdown, but “has no guarantees” that US authorities will grant them.
In addition to this loss, already last week Nvidia had predicted a sharp drop in revenue for the current quarter, due to the weak moment in the gaming industry.
MEASURE AFFECTS MAIN CHINESE TECHNOLOGY
According to the news agency, the measure should affect almost all major technology companies that have public clouds or advanced artificial intelligence training modules. Analysts cited companies such as Alibaba, Tencent, Baidu and Huawei.
Shu Jueting, a spokesman for the Chinese Ministry of Commerce, said Beijing opposes the measures, saying they undermine the rights of Chinese companies and threaten to break global supply chains.
Not everything looks negative, as shares of Chinese artificial intelligence chip makers Hygon Information Technology and Loongson Technology Corp rose 10% and 6%, respectively, this Thursday.
Source: With Agencies