A sign is displayed at the Nvidia headquarters in Santa Clara, Calif., May 25, 2022.
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Nvidia said Thursday that it will allow the US government to continue development of its H100 artificial intelligence chip in China. It’s a win for the company after it warned Wednesday that new export controls could hamper its operations in the country.
Nvidia said in a filing with the SEC on Wednesday that the US government has restricted the sale of its A100 and H100 high-performance AI chips for servers to China and Russia. In China he can develop the H100, but sales of both chips are still limited in these markets. Nvidia expects new export restrictions to hit its revenue by $400 million this quarter.
The company’s shares fell nearly 10% in Thursday trading.
“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 Biden administration is seeking to limit the export of certain semiconductors and equipment from the United States because of fears that Chinese companies will use them for military purposes. Graphics processors like those made by Nvidia and AMD are well suited for artificial intelligence applications, including weapons development, facial recognition, and other military uses.
The H100 is Nvidia’s upcoming enterprise AI chip that was expected to ship before the end of the year. Part of its development takes place in China. The A100 is an older model, 3 years old. Both are graphics processors that can be used for supercomputing and artificial intelligence.
Nvidia’s data center business, which includes A100 and H100 sales, is one of the company’s fastest growing segments, with sales of $3.8 billion in the June quarter, up 61% year over year.
But Nvidia CEO Jensen Huang warned analysts in August that Chinese cloud companies were slowing down building data centers and that China was a “very big market” for the company. Nvidia said Thursday that it can continue to ship AI chips from its Hong Kong facility until September 2023.
“Chinese hyperscalers and Chinese internet companies have slowed down infrastructure investment very much this year. It slowed down,” said Huang.
Some analysts believe Nvidia can help ease the impact of the new export restrictions by working with the government, but it’s unclear if the Chinese government could retaliate with its own ban.
“While there are potential short- and medium-term risks from the export ban, Nvidia is working closely with USG to navigate through the situation, and USG believes that Nvidia’s accelerated computing platform will be of great value to the world’s technology. We believe we are well aware of the critical and strategic importance of the industry,” JP Morgan analyst Harlan Sur wrote in a report on Thursday.
The Commerce Department said the new export restrictions were related to national security, but did not respond to additional questions about whether it clarified or changed Nvidia’s policy.
“Although we are not in a position to outline specific policy changes at this time, we are aware of the additional technology, end-use, and end-user-related changes that are necessary to protect the national security and foreign policy interests of the United States. We are taking a comprehensive approach to implement the measures,” a Commerce Department representative said Wednesday.
AMD said Wednesday it had received new licensing requirements from the Department of Commerce, but did not expect it to have a material impact on its business given its low exposure to China. fell more than 7% to