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US imposes sanctions on Nvidia's chip sales in China

New export rules are intended to thwart China’s efforts to use AI computing chips for military purposes


US officials have barred Nvidia from exporting two AI-based computing chips to China, the company confirmed on Wednesday.

As an aftermath of the ban, the US chip designer’s shares fell 6.6% in extended trading. Specifically, the restriction affects Nvidia’s high-performance graphics processors sales of A100, including the development of the company’s flagship chip H100.

According to the US government, new licensing requirements for Nvidia exports to China “address the risk that the covered products may be used in, or diverted to, a 'military end use' or 'military end user' in China."

The move directly impacts Nvidia’s $400 million pre-booked sales of the affected chips to China this quarter. The sanctions also extend to any future export to China, Hong Kong, and Russia. 

Additionally, any forthcoming Nvidia integrated circuit that achieves peak performance and chip-to-chip I/O connectivity that is equal to or greater than those of the A100, as well as any system that incorporates such a circuit, is subject to the new license requirement.

“On August 26, 2022, the U.S. government, or USG, informed Nvidia that the USG has imposed a new license requirement, effective immediately, for any future export to China (including Hong Kong) and Russia of the Company’s A100 and forthcoming H100 integrated circuits,” a statement by Nvidia reads.

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As matters stand, the chipmaker is working toward fulfilling its Chinese customers’ planned or future purchases of Nvidia’s Data Center products. 

“To the extent that a customer requires products covered by the new license requirement, the Company may seek a license for the customer but has no assurance that the USG will grant any exemptions or licenses for any customer, or that the USG will act on them in a timely manner,” Nvidia’s filing with the SEC reads. 

The shares of AMD also dropped by 3.7% after receiving new license requirements that prevent the firm from exporting its MI250 artificial intelligence chips to China.

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