Nvidia says U.S. government allows A.I. chip development in China

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Nvidia said Thursday that the US government will continue to develop its H100 artificial intelligence chip in China. It’s a win for the company after warning on Wednesday that new export restrictions could hamper its operations in the country.

Nvidia said in an SEC filing on Wednesday that the US government is restricting sales of high-performance AI chips for servers, the A100 and H100, to China and Russia. Sales of both chips are still limited in those markets, although it may still develop the H100 in China. Nvidia expects a $400 million drop in revenue in the current quarter due to new export restrictions.

The company’s stock fell nearly 9% in trading Thursday.

“The U.S. government has authorized exports, re-exports and domestic transfers necessary to continue the development of H100 integrated circuits by NVIDIA Corporation or the company,” Nvidia said in a filing Thursday.

On May 25, 2022, in Santa Clara, California, a sign was posted at Nvidia’s headquarters.

Justin Sullivan | Getty Images

The Biden administration is working to restrict US exports of certain semiconductors and equipment over fears that Chinese companies could use them for military purposes. Graphics processors like the kind Nvidia and Advanced Micro Devices make are well suited to artificial intelligence applications, including weapons development, facial recognition, and other military uses.

The H100 is Nvidia’s upcoming enterprise AI chip that was previously expected to ship by the end of the year. Part of the development takes place in China. The A100 is an older model that has been shipping for three years. They are both graphics processors that can be used for supercomputing and artificial intelligence.

Nvidia’s data center business, which includes sales of the A100 and H100, is one of the company’s fastest-growing businesses, with revenue of $3.8 billion in the June quarter, an annual increase of 61%.

However, Nvidia CEO Jensen Huang warned analysts in August that Chinese cloud companies were slowing down the construction of their data centers and that China was a “very large market” for the company. Nvidia said on Thursday it can continue to ship AI chips from its Hong Kong facility until September 2023.

“The Chinese hyperscalers and the Chinese Internet companies have really, really slowed down infrastructure investment this year, especially starting in — they’ve been kind of slow building out and really accelerating — well, really slowed down in the second quarter,” Huang said.

Some analysts believe Nvidia can mitigate the impact of the new export restrictions by partnering with the government, though it’s unclear whether the Chinese government can retaliate with its own bans.

“While there are potential short- and medium-term risks from the export ban, Nvidia is working closely with the [U.S. government] to navigate the situation and we believe the USG is fully aware of the critical/strategic importance of Nvidia’s accelerated computing platform to the global technology industry,” JPMorgan analyst Harlan Sur wrote in a note Thursday.

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The Commerce Department said the new export restrictions are related to national security, but it did not answer follow-up questions about whether it clarified or changed policies for Nvidia.

“While we are unable to outline specific policy changes at this time, we are taking a comprehensive approach to implement additional actions needed with regard to technologies, end-uses and end-users to protect U.S. national security and foreign interests.” policy,” a Commerce Department representative said Wednesday.

AMD also said on Wednesday that it has received new licensing requirements from the Department of Commerce but did not expect it to materially affect its operations due to its lower exposure to China. Shares of AMD fell more than 4% in Thursday’s trading.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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