The United States has banned Nvidia from selling some chips in one part of the world.

New restrictions imposed by the US government on Nvidia’s ability to sell artificial intelligence chips to Chinese customers threaten to deal a heavy blow to the country’s development of a wide range of cutting-edge technologies.

The Santa Clara, California-based company disclosed in a regulatory filing this week that it can no longer sell certain next-generation chips in China without a license from Washington.

These AI accelerators go into big data centers to train AI models for tasks such as autonomous driving, image recognition and voice assistance.

Nvidia has a nearly 95% share of this market, according to Fubon Securities Investment Services estimates, and the rest is accounted for by Advanced Micro Devices, a US chip company that is bound by the same export restrictions.

Without access to their equipment, tech giants that rely on large server farms to develop everything from electric and self-driving cars to social services and the cloud will be at a disadvantage against international competition.

“This is the reality of the new Cold War, and broader export restrictions are an integral part of it,” said Amir Anvarzadeh of Asymmetric Advisors.
“Export restrictions will expand and impact semiconductors, AI, autonomous systems and biotechnology.”

The increase in trade restrictions, which Washington has not signalled it is considering before imposing them, comes on top of existing sanctions and limits on exports of chip-making equipment to China.

Chinese semiconductor firms are already denied access to the most advanced lithography equipment from ASML Holding in the Netherlands and cutting-edge equipment from US suppliers, including Lam Research.

The New Cold War

The recent CHIPS Act in the US is forcing global chip makers to effectively choose between investing in the US and China.

Now that Washington is also limiting access to AI products, it has created another roadblock for Beijing’s technology expansion as it works to increase its own domestic semiconductor capacity.

The head of one of China’s largest electric vehicle makers was quick to condemn the restrictions.

The measures will “bring a challenge to cloud-based autonomous driving training,” XPeng CEO He Xiaopeng said on his WeChat account.

Nvidia is a leader in providing hardware for autonomous driving – both for developing algorithms in massive server farms and for providing on-board processors for cars to be aware of their surroundings.

Washington told Nvidia that the new boards are designed to prevent advanced or hijacked AI equipment from being used for military purposes by China or Russia.

In June this year, the Washington, DC-based think tank The Center for Security and Emerging Technology said that nearly all of the 97 AI chips in public records of Chinese military procurement between April and November 2020 were designed by US companies Nvidia, Intel, Microsemi or Xilinx, now part of AMD.

However, the brunt of the impact will be felt by Nvidia itself and China’s biggest tech firms such as Alibaba Group and Tencent, which are the closest rivals to US cloud services from Amazon’s AWS, Alphabet’s Google Cloud and Microsoft’s Azure.

The Chinese government opposes U.S. restrictions on chip exports to the country because the move infringes on the legitimate rights and interests of both Chinese and American companies, Chinese Commerce Ministry spokesman Shu Jueting said in a briefing Thursday in response to a question about the Nvidia disclosure.

China urges the US to immediately stop the practice and treat companies in all countries fairly, he said.

Related posts

Leave a Comment