US authorities banned Nvidia from selling AI chips to China

Nvidia announced yesterday that they received from US authorities the order to stop selling to China two latest-generation computer chip models optimized for artificial intelligence applications.

This measure is part of the concerns of the United States government about the alleged military use that China would give to specialized artificial intelligence platforms.

US bans Nvidia from selling AI chips to China

This determination currently affects two brand microchips, the A100 and H100 models. Both copies fulfill the task of accelerating machine learning processes.

As reported ReutersAMD – its direct competitor in this area – similarly received new license requirements, according to which the company must stop exporting its MI250 artificial intelligence chips to China. However, under its interpretation of the new mandate, the MI100 model, also belonging to this class of chips, would be exempt from the restriction.

The US Department of Commerce, the body responsible for this decision, did not specify what are the new criteria established for AI chips that can no longer be shipped to China, but said it is reviewing its policies and practices related to China to “keep advanced technologies out of their reach”.

“While we are not in a position to outline specific policy changes at this time, we are taking a comprehensive approach to implementing additional necessary actions related to technologies, end uses, and end users to protect US national security and the interests of foreign policy”a spokesman for the trade entity told Reuters.

Without the chips from Nvidia and AMD, American companies that lead this segment of the industry, Chinese organizations would not have the expected profitability and even the technical feasibility to carry out certain projects.

These AI platforms are commonly used to develop image recognition and natural language processing systems. Just as in consumer applications these technologies are used to tag images, execute commands or answer queries, for military purposes these resources can be used in scanning satellite images to spot weapons or bases, as well as in other digital intelligence activities.

After this announcement was made public, Nvidia shares fell 6.6%. The company said it had set aside $400 million in sales to China of the affected chips for this quarter, which could be lost if Chinese companies don’t access them.

Nvidia announced that it will appeal for an exemption to this restrictive measure, but without any guarantee that they can obtain a favorable response from the US authorities.