U.S. officials order Nvidia to halt sales of top AI chips to China

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Technology company Nvidia’s logo is seen at its headquarters in Santa Clara, Calif., Feb. 11, 2015. REUTERS/Robert Galbraith

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Aug 31 (Reuters) – Chip designer Nvidia Corp (NVDA.O) said on Wednesday that U.S. officials told the company to stop exporting two top computer chips for artificial intelligence work to China, a move that could affect the ability of Chinese companies to use advanced works like image recognition. and hinder Nvidia’s operations in China.

Nvidia shares fell 6.6% after hours. The company said the ban, which affects the A100 and H100 chips designed to accelerate machine learning tasks, could hinder the development of the H100, flagship chip Nvidia announced this year.

Shares of Nvidia rival Advanced Micro Devices Inc (AMD.O) fell 3.7% after hours. An AMD spokesperson told Reuters that the company has received new licensing requirements that will halt the export of its MI250 artificial intelligence chips to China, but it believes its MI100 chips will not be affected. AMD said it does not believe the new rules will have a material impact on its operations.

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Nvidia said US officials said the new rule will “address the risk that the covered products could be used in or diverted to a ‘military end-use’ or ‘military end-user’ in China.”

Asked for comment, the U.S. Department of Commerce would not say what new criteria it has set for AI chips that can no longer be shipped to China, but said it is reviewing its China-related policies and practices “to exclude advanced technologies from the wrong ones.” hands.

“While we are unable at this time to outline specific policy changes, 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.” policies,” a spokesperson told Reuters.

The announcement signals a major escalation in US crackdown on China’s technological capabilities, as tensions bubble over the fate of Taiwan, which manufactures chips for Nvidia and nearly every other major chip maker.

Without US chips from companies like Nvidia and AMD, Chinese organizations won’t be able to cost-effectively perform the kind of advanced computer technology used for image and speech recognition, among many other tasks.

Image recognition and natural language processing are common in consumer applications such as smartphones that can answer questions and tag photos. They also have military applications, such as searching satellite images for weapons or bases and filtering digital communications for intelligence gathering.

Nvidia said it had booked $400 million in sales of the affected chips to China this quarter, which could be lost if Chinese companies decide not to buy alternative Nvidia products. It said it plans to request exceptions to the rule but has “no guarantees” that US officials will grant them.

Stacy Rasgon, a financial analyst at Bernstein, said the disclosure indicated that about 10% of Nvidia’s data center sales, which investors have been closely monitoring in recent years, came from China and that the hit on sales was likely “manageable” for Nvidia.

“It’s not an (investment) thesis that’s changing, but it doesn’t look good,” Rasgon said. “What happens now on both sides is the question,” he said of possible escalations in the future.

The chip ban comes as Nvidia already forecast a sharp drop in revenue for the current quarter last week due to a weaker game industry. Nvidia said it expects third-quarter revenue of $5.90 billion, down 17% from the same period last year.

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Reporting by Eva Mathews and Nivedita Balu in Bengaluru, Stephen Nellis and Jane Lee in San Francisco, Karen Freifeld in New York and Alexandra Alper in Washington; Editing by David Gregorio and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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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