Register now for FREE, unlimited access to Reuters.comRegister
Aug 31 (Reuters) – Chip designer Nvidia Corp ( NVDA.O ) said on Wednesday that U.S. officials had told it to stop exporting two major computer chips for artificial intelligence work to China, a move that could cripple the ability of Chinese companies to carry out advanced. they work like image recognition and hinder Nvidia’s business in China.
Shares of Nvidia fell 6.6% after hours. The company said the ban, which affects its A100 and H100 chips designed to speed up machine learning tasks, could interfere with the completion of development of the H100, the flagship chip Nvidia announced this year.
Shares in rival Nvidia Advanced Micro Devices Inc ( AMD.O ) fell 3.7% after hours. An AMD spokesman told Reuters the company had received new licensing requirements that will prevent its MI250 artificial intelligence chips from being exported to China, but believes its MI100 chips will not be affected . AMD said it does not believe the new rules will have a material impact on its business.
Register now for FREE, unlimited access to Reuters.comRegister
Nvidia said U.S. officials told it the new rule “will address the risk that covered products could be used or diverted to a ‘military end use’ or ‘military end user’ in China.”
Asked for comment, the U.S. Commerce Department did not say what new criteria it has established for AI chips that can no longer be shipped to China, but said it is reviewing its China-related policies and practices.” keeping advanced technologies out of harm’s way.” hands
“While we are not in a position to describe specific policy changes at this time, we are taking a comprehensive approach to implementing the additional actions necessary related to technologies, end users, and end users to protect the national security of the United States and foreign policy interests,” a spokesman told Reuters.
The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. REUTERS/Robert Galbraith
The announcement marks a major escalation of the U.S. crackdown on China’s technology capabilities as tensions bubble over the fate of Taiwan, where chips for Nvidia and nearly every other major chip company are made.
Without American chips from companies like Nvidia and AMD, Chinese organizations will not be able to profitably carry out the kind of advanced computing used for image and speech recognition, among many other tasks.
Image recognition and natural language processing are common in consumer applications such as smartphones that can answer queries and tag photos. They also have military uses such as scanning satellite imagery for weapons or bases and filtering digital communications for intelligence gathering purposes.
Nvidia said it had set aside $400 million in sales of the affected chips this quarter in China that could be lost if Chinese companies decide not to buy alternative Nvidia products. He said he plans to apply for waivers to the rule, but has “no guarantee” that U.S. officials will grant them.
Stacy Rasgon, a financial analyst at Bernstein, said the disclosure indicated that about 10 percent of Nvidia’s data center sales, which investors have watched closely in recent years, came from China and that the sales impact was “manageable” for Nvidia.
“It’s not a change in (investment) thesis, but it doesn’t look good,” Rasgon said. “What happens now on both sides is the question,” he said of potential escalations in the future.
The chip ban comes as Nvidia last week already forecast a sharp drop in revenue for the current quarter due to a weaker gaming industry. Nvidia said it expected third-quarter sales of $5.9 billion, down 17 percent from the same period last year.
Register now for FREE, unlimited access to Reuters.comRegister
Reporting by Eva Mathews and Nivedita Balu in Bangalore, Stephen Nellis and Jane Lee in San Francisco, Karen Freifeld in New York and Alexandra Alper in Washington; Editing by David Gregorio and Matthew Lewis
Our standards: the Thomson Reuters Trust Principles.