Finance & Economics

Nvidia faces ban amidst US-China tech war

The world’s largest maker of AI chips Nvidia is at the forefront of the latest US tech sanctions targeting China

Nvidia US China tech ban

Nvidia faces ban amidst US-China tech war. Source: alizila.com

Nvidia is a subject of a new SEC filing. On August 26, the U.S. government informed the corporation that it has imposed a new license requirement for any future export to China (including Hong Kong) and Russia on two of its most advanced AI chips. 

The ban could cost Nvidia as much as $400 million in potential sales to China in Q3 2022, as China is the company’s second-largest market after Taiwan. For instance, in 2021 Chinese sales made up 26% of Nvidia’s total revenues.

The U.S. government foresees the risk that the covered products may be used for military purposes in China and Russia. At the same time, the ban would hinder many Chinese businesses and organizations from using silicons for legal purposes.

The two targeted chips are the Nvidia A100 and H100 graphic processing units. A100 provides high-performance computing, storage, and networking capabilities for various industries including healthcare, finance, and manufacturing.

H100 is the firm’s upcoming enterprise AI chip that is expected to ship by the end of this year. Part of its production is done in China, and the US government has granted permission to continue manufacturing there. At the same time, purchases by Chinese customers will be restricted.

Besides, the updated authorization allows Nvidia to keep exporting A100 to its U.S. customers with data centers in China through March 1, 2023.

However, the ban on Hong Kong export is ambiguous. Although the “U.S. government authorized A100 and H100 order fulfillment and logistics through the Company’s Hong Kong facility through September 1, 2023,” it’s still unclear whether Chinese customers can access these chips.

The Chinese government condemned the ban as “sci-tech hegemony”.

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Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.