The U.S. government will tighten export controls on cutting-edge artificial intelligence chips. The latest development is that Nvidia's H800 and A800 GPUs, which are tailor-made for China in order to circumvent sanctions, are banned from sale.
On October 17, 2023, CNBC reported that the U.S. Department of Commerce announced on Tuesday that it plans to restrict the sale of more advanced artificial intelligence chips to China in the next few weeks. Senior government officials said the new policy will restrict exports of NVIDIA A800 and H800 chips .
The move is an update to existing rules and will severely restrict Nvidia and other chipmakers from selling high-performance semiconductors to China.
The U.S. government says the new rules are intended to close loopholes that emerged after export restrictions on artificial intelligence chips came into effect last year.
Early restrictions banned sales of the NVIDIA H100, the processor of choice for U.S. artificial intelligence companies such as OpenAI. Instead, Chinese companies are able to buy slightly slower versions called H800 or A800 that comply with U.S. restrictions, primarily by slowing down the connection on the device (called an interconnect).
The new rules will also ban the use of these chips , senior government officials said in a briefing with CNBC reporters . The restrictions could also affect chips sold by Intel and AMD. Other rules could hinder companies such as Applied Materials from selling and exporting semiconductor manufacturing equipment to China.
U.S. Commerce Secretary Gina Raimondo said in an interview with reporters that the purpose of U.S. sanctions is to prevent China from obtaining advanced semiconductors that may promote breakthroughs in the field of artificial intelligence, especially for military purposes.
She said the policy update, specifically designed to control access to computing power, would significantly slow down the development of China's next generation of cutting-edge models, especially as they could be used for modern military purposes.
U.S. government officials say they have no intention of harming China's economic growth.
There are reports that China will ban the use of NVIDIA H800 and A800, which are already streamlined versions of NVIDIA previously developed to comply with US trade policies. Since access to the high-end H100 has long been suspended, changes in U.S. policy will obviously hinder the development of China's artificial intelligence market.
Nvidia appears to have anticipated these restrictions, saying 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 working to provide products that support thousands of applications across many different industries, and given the global demand for our products, we do not anticipate a material impact on our financial results in the near term."
Nvidia said in an SEC filing on Tuesday that the restrictions apply to the company's A100, A800, H100, H800, L40, L40S and RTX 4090 chips and affect entire systems sold with those chips, including its DGX and HGX system. Nvidia said the restrictions could harm its ability to complete new product development as planned.
Nvidia shares fell about 6% in early trading in New York after the latest regulations were announced. Shares of AMD and Intel both fell about 3%.
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