The updated export restrictions were to take effect on Nov. 16.
The U.S. government notified Nvidia on Oct. 23 that the company had to immediately stop shipping some of its major artificial intelligence (AI) chips, mainly designed for the Chinese market, the company said in a
filing.
The notification to Nvidia was unexpected because the updated export restrictions would have initially taken effect on Nov. 16, a month after the export control measures were officially announced.
On Oct. 17, the Commerce Department
updated its restrictions on semiconductor exports to China, seeking to slow the communist regime’s development of advanced military technologies. The new rules will place additional limits on the types of advanced semiconductors that U.S. firms can sell to China, which the documents refer to as an “adversary” of the United States.
The latest notification from the Biden administration to Nvidia will not only impact the company’s previously banned A100 and H100 chips and the A800 and H800 chips that were to be banned effective Oct. 17, but the restrictions will also affect its new generative AI chip
L40S launched in August.
Under the latest requirements, Nvidia must immediately stop shipments of A800 and H800 chips to China.
The company did not specify the reason for the accelerated effective date of the new chip export restrictions.
“Given the strength of demand for the company’s products worldwide, the company does not anticipate that the accelerated timing of the licensing requirements will have a near-term meaningful impact on its financial results,” it said in the
filing date Oct. 24.
The new measures from the Department of Commerce closed loopholes in export controls released last year, preventing American chipmakers from selling semiconductors to China that circumvent government restrictions. The latest rules also have circumvention prevention measures to stop companies from exploiting loopholes.
The “updated rules will increase effectiveness of our controls and further shut off pathways to evade our restrictions. These controls maintain our clear focus on military applications and confront the threats to our national security” posed by the Chinese regime’s military-civil fusion strategy, Secretary of Commerce Gina M. Raimondo
said at that time.
In October 2022, the Biden Administration imposed sweeping export controls on chipmaking equipment to China. The measure aims to contain the Chinese Communist Party’s ambition to strengthen its military with cutting-edge technology.
Under last year’s export restrictions, Nvidia was
banned from selling its top cutting-edge chips, A100 and H100, to China. It said the ban could cost the company $400 million in potential sales in China.
However, Nvidia
bypassed the Commerce Department’s export restrictions by creating two new chips, A800 and H800, with slower speeds that do not fall under the export restrictions but still allowed Chinese buyers to conduct advanced AI research.
In the second quarter’s financial results
announced in August, Nvidia
posted record revenue, up 101 percent from a year ago, amid surging demand for AI chips. The company’s market value
reached $1 trillion in June, joining tech giants like Google, Microsoft, and Apple to hit that milestone.
“However, over the long term, restrictions prohibiting the sale of our data center GPUs to China, if implemented, will result in a permanent loss of an opportunity for the U.S. industry to compete and lead in one of the world’s largest markets,” Nvidia CFO Colette Kress said in company’s earnings
call in August.
Chinese Firms Are Rushing to Buy Nvidia’s AI Chips
Before the updated export control measures, Chinese tech firms were rushing to buy Nvidia’s modified A800 and H800 chips due to concerns that Washington might impose stricter regulations.
The
Financial Times, citing China’s customs data, reported in August that the country’s chipmaking tool imports in June and July reached nearly $5 billion, up 70 percent compared to $2.9 billion during the same period last year.
Most of the imports are from Japan and the Netherlands. The two key U.S.-led allies joined U.S. export restrictions on chipmaking tools to curb China’s chip industry.
Chinese major tech firms like Semiconductor Manufacturing International (SMIC) and Yangtze Memory Technologies (YMTC) rely on equipment from the United States, the Netherlands, and Japan for equipment to upgrade their chip production lines.
The Epoch Times has reached out to Nvidia for comment.
Andrew Thornebrooke contributed to this article
