China Condemns Move Threatening Access to Advanced Nvidia Chips

China has condemned a US move that threatens its access to high-end processors from American companies that are central to the most demanding artificial intelligence work, after Washington stepped up its efforts to restrict exports of cutting-edge technology to its trade and military rival.

US officials have told chipmaker Nvidia that it will need special licences to sell Chinese customers two of its processors that are widely used to speed up AI calculations, the company said in a filing on Wednesday.

The government is imposing the requirement on any products containing its A100 and forthcoming H100 graphical processing units. The processors are used as “accelerators” to speed up the most data-intensive parts of the machine learning calculations used in AI.

AMD, whose GPUs are also used as accelerators for AI calculations, said it had also been told that it would need to apply for licences in order to sell its most advanced accelerator, the MI250X, in China.

Nvidia said the crackdown was aimed at preventing military use of the processors. However, powerful AI chips are an important dual-use technology that also plays a central role in the datacentres of companies that process large volumes of data, potentially leading to broader economic effects.

Shares of the company fell 7.7 per cent in New York on Thursday.

Chinese foreign ministry official Wang Wenbin said on Thursday that the US was attempting to impose a “technological blockade” on China. He said the ban showed America was trying to maintain its “technological hegemony”.

The move marks the latest salvo from the US to restrict tech exports to China over what Washington has described as concerns that they could be used for military purposes. The US has imposed restrictions on exporting technology to a number of Chinese companies and has taken aim at the country’s push for self-sufficiency in semiconductors.

Chinese commerce ministry representative Shu Jueting said the move undermined the legitimate rights and interests of Chinese companies and the stability of global industrial and supply chains.

Nvidia said in a filing that it was “engaging with customers in China” and “seeking to satisfy their planned or future purchases of our data centre products with products not subject to the new licence requirement”.

Analysts at investment bank Jefferies said the biggest users of the chipsets in China were cloud service providers and large internet companies. There were no direct local substitutes, they said, and one alternative would be to use multiple lower-end processors from Nvidia that were not banned. This attempt to replicate the processing power would not achieve the same speeds and come at a much higher cost, they added.

Nvidia said the order also applies to GPUs sold in Russia, though it does not sell its products in the country. It added that about $400mn in potential sales to China this quarter might be affected by the new licence requirement.

September 02, 2022