U.S. restricts exports of more AI chips to China, including Nvidia H800

tendata blogTrade Trends News

ten data blog18-10-2023

-The U.S. Department of Commerce announced Tuesday that it plans to restrict the sale of more advanced artificial intelligence chips to China.

-Senior government officials said the new export restrictions will limit exports of Nvidia A800 and H800 chips.

-The restrictions could also affect chips sold by Intel and AMD. Other rules could prevent companies such as Applied Materials, Panarin and KLA from selling and exporting semiconductor manufacturing equipment to China.

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The U.S. Commerce Department announced Tuesday that it plans to block sales of more advanced artificial intelligence chips to China in the coming weeks.

The U.S. government said the new rules are intended to close loopholes that emerged after AI chip export restrictions went into effect last year.

Chip stocks were lower in Tuesday trading on the news. Nvidia closed down about 5 percent, while Broadcom and Marvel slipped about 2 percent and 1 percent, respectively. shares of AMD fell more than 1 percent; Intel closed down about 1.4 percent.

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Earlier restrictions prohibited the sale of the Nvidia H100, the processor of choice for U.S. artificial intelligence companies like OpenAI. Instead, Chinese companies were able to buy a slightly slower version, called the H800 or A800, that complied with USA restrictions, mostly by reducing the speed of connections on devices, called interconnects.

The new rules would also prohibit the use of those chips, senior government officials said in briefings with reporters.

The restrictions could also affect chips sold by Intel and AMD. other rules could prevent companies such as Applied Materials from selling and exporting semiconductor manufacturing equipment, lin and KLAs to China.

The restrictions cut off a large and growing market for AI semiconductors and could raise concerns that Beijing will retaliate economically against U.S. companies doing business in China.

Nvidia appears to have anticipated the restrictions and said in August that they would not have an immediate material impact on earnings, but could be damaging in the long run.

"We comply with all applicable regulations while striving to deliver products that support thousands of applications across many different industries," an Nvidia spokesperson told CNBC. "Given the global demand for our products, we do not expect a meaningful impact on our financial results in the near term."

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Nvidia said in an SEC filing Tuesday that the restrictions apply to the company's A100, A800, H100, H800, L40, L40S and RTX 4090 chips. It also said it affects the entire range of systems sold with those chips, including its DGX and HGX systems. NVIDIA said the restrictions could jeopardize its ability to complete new product development as planned.

U.S. Commerce Secretary Gina Raimondo said in an interview that the U.S. restrictions are aimed at preventing China from obtaining advanced semiconductors that could drive breakthroughs in artificial intelligence, especially for military use. U.S. officials said they were not intended to harm China's economic growth.

"These updates are specifically designed to control access to computing power, which would significantly slow the development of China's next-generation cutting-edge models and could be exploited in ways that threaten the United States and our allies, particularly because they could be used for military purposes and modernization," Raimondo said.

Senior administration officials have said the U.S. will simply restrict exports of data center chips if they exceed performance thresholds set last October, or if they exceed a new performance density threshold benchmark measured in floating-point operations per square millimeter.

Companies that want to export AI chips to China or other embargoed regions must notify the U.S. government.

Senior administration officials also said they plan to expand the list of semiconductor manufacturing equipment subject to U.S. restrictions.

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Chips used in consumer products such as game consoles or smartphones would not be subject to export controls, but companies may have to notify the Commerce Department of their orders if the chips are fast enough.

The U.S. government is also closing loopholes in how chips can be shipped to companies headquartered in China or other embargoed regions such as Macau to prevent loopholes where foreign subsidiaries buy chips and then ship them to China.

Raimondo said the new restrictions would only affect a small portion of chip exports to China.

"The fact is that even after updating this rule, China will still import hundreds of billions of dollars of semiconductors from the United States," Raimondo said.

U.S. officials said the rule would be made available to the public for 30 days and then take effect.

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