NVIDIA (NVDA) reportedly overheard the US government talking about its exports to China. On Wednesday, the government imposed new licensing requirements on NVIDIA for any future exports to China, which also includes Hong Kong. The new restrictions will apply to the company’s A100 and H100 line of chips.
The following is an excerpt from a United States Securities and Exchange Commission report released Wednesday:
On August 26, 2022, the United States Government, or USG, notified NVIDIA Corporation, or the Company, that the USG had imposed a new licensing requirement, effective immediately, for all future exports to China (including Hong Kong) and Russia of the upcoming A100 and H100 Integrated Circuits. DGX or any other system incorporating A100 or H100 ICs and the A100X are also covered by the new licensing requirement. The license requirement also includes any future NVIDIA ICs achieving both peak performance and chip-to-chip I/O performance at or above thresholds that are roughly equivalent to the A100, as well as any system that includes these circuits. A license is required to export technology to support or develop covered products. The United States government has indicated that the new licensing requirement will address the risk of covered products being used or diverted to a “military end use” or “military end user” in China and Russia. The Company does not sell products to customers in Russia.
The news was first reported by Reuters late Wednesday afternoon. The A100 and H100 chip lines are said to be related to AI and machine learning. While NVIDIA previously announced expectations for the ramp-up of new GPUs, CPUs, DPUs, and robotic processors during the recent Q1 2023 financial report, the company warns that the new restrictions could affect the completion of H100 chips.
NVIDIA now appears to be caught in an escalating conflict between the United States and China. Shares of NVIDIA (NVDA) closed at $150.94 per share, down 2.42%, and appear to be falling further in after-hours trading.
We’ll continue to monitor this story as it develops, as further US government restrictions could affect both NVIDIA and competitor AMD in the short and long term.