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Chinese electric car firms safe from US Nvidia chip ban

Nvidia has found success in China by selling automotive chips to Chinese electric car companies. However, the US semiconductor giant is restricted from sending some products to China. So far, electric car makers don’t seem to be affected.

Budrul Cukrut | Sopa Images | Lightrocket | Getty Images

BEIJING — U.S. restrictions on the sale of Nvidia chips to China do not affect Chinese electric vehicle companies because they use automotive systems that do not contain licensed products.

Chipmaker Nvidia’s shares plunged about 13% this week after the company announced new U.S. restrictions on exports to China, impacting potential sales for the quarter by about $400 million. .

In China, the Nvidia Drive Orin chip is at the core of electric vehicle makers’ driver assistance technology. These semi-autonomous driving systems are a key selling point for companies in the highly competitive Chinese market. Some automakers are also using Nvidia’s Xavier chips. Automotive is a relatively small but rapidly growing segment of Nvidia’s business.

However, the new US restrictions cover Nvidia’s A100 and H100 products, and sales of those chips are part of the company’s much larger data center business. These products are graphics processors that can be used for artificial intelligence.

“There should be no limits for Xavier and Orin.”, Xpeng, Nio and others will continue to ship with these chips,” said Bevin Jacob, partner at Shanghai-based investment and consulting firm Automobility.

However, Jacob warned that US companies shipping chips related to artificial intelligence and self-driving cars to China could face “closer scrutiny” in the future.

Piper Sandler's Kumar said the new US regulations will bring 10-12% uncertainty to Nvidia's data center business.

Xpeng declined to comment. Nio, Li Auto, Huawei and Jidu (a new electric vehicle brand backed by Baidu and Geely) did not respond to requests for comment.

The new U.S. rules are designed to reduce the risk of aiding the Chinese military, according to the U.S. government, Nvidia said in filings with the Securities and Exchange Commission on Wednesday. However, it is unclear what prompted this particular policy move, or what will drive future policy moves.

In another encouraging sign for chip makers, the US will allow Nvidia to continue development of its H100 artificial intelligence chip in China, the company said Thursday.

“The U.S. government has approved the necessary exports, reexports, and domestic transfers to continue development of NVIDIA Corporation or its H100 integrated circuits,” Nvidia said in a filing Thursday.

The company said second-quarter automotive revenues were $220 million, up 45% from the year-ago quarter.

According to StreetAccount records, Nvidia CEO Jensen Huang said on the earnings call in late August:

WeRide, a self-driving technology startup, said in a statement that there would be “no immediate impact from the ban.”

“We believe that both the supply and demand sides of the industry will work closely together to address the ever-changing business environment and protect the continued development of technology,” the company said in a statement to CNBC. .

Another self-driving startup, Pony.ai, said it was unaffected, as was automaker Geely.

— CNBC’s Kif Leswing contributed to this report.

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