Nvidia warns tighter AI chip export restrictions to China risk permanent US industry losses

[midian182]

In context: Nvidia has responded to reports that the US is considering expanding its restrictions on the export of AI chips to China, a move that would impact more of team green's in-demand products. The company says that the move would hurt its future growth, but there would be no "immediate financial impact."

Nvidia's share price took a tumble yesterday following a report that the US government is considering tightening its export controls on AI chips to China as a way to prevent them being used for military applications.

The update to last year's restrictions would mean Nvidia would need to obtain a licence to sell its AI chips, including the A800 and H800, to China – both are less powerful versions of other chips, and were created by Nvidia to comply with the rule that chip-to-chip data transfer rates must be below 600 GBps.

Nvidia's market cap is above $1 trillion right now as a result of its AI products. Demand for these chips is huge in China, with Tencent, Alibaba, and Baidu making additional orders this year, while ByteDance has reportedly ordered $1 billion worth of GPUs.

Speaking at a financial conference yesterday, Nvidia CFO Colette Kress downplayed the effect the new export restriction would have on the company, at least in the near term.

Nvidia might not be able to sell the A800 in China anymore

"We are aware of reports that the U.S. Department of Commerce is considering further controls that may restrict exports of A800 and our H800 products to China," Kress said. "However, given the strength of our demand for our products worldwide, we do not anticipate that such additional restrictions, if adopted, would have an immediate material impact on our financial results."

Kress did warn that restrictions prohibiting the sale of Nvidia's datacenter GPUs to China would result in "a permanent loss of opportunities for US industry to compete and lead in one of the world's largest markets and impact on our future business and financial results."

Kress added that between 20% and 25% of Nvidia's data center revenue, which totaled $4.28 billion last quarter, comes from China, though that includes chips beyond those used for AI purposes.

Nvidia shares were down 3.2% on Wednesday before rising slightly, but they still ended down 1.8%. Chinese AI company stocks experienced heavier loses.

China has strongly opposed the export sanctions placed on the country by the US. In July, the Asian nation banned the sale of Micron chips over what it claims were major security risks to its critical infrastructure supply chain, but many think this was just a retaliatory move.

Earlier this month we heard that universities and businesses in China are turning to underground dealers to secure restricted Nvidia AI chips, and paying a premium to get their hands on them.

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https://www.techspot.com/news/99246-nvidia-warns-tighter-ai-chip-export-restrictions-china.html

 

[wiyosaya]

Awww. Pity Party time. The Leatherman will no longer be able to afford his leather jackets.

 

[yRaz]

"OHHHHHH, MY POOR SALES NUMBERS!!!!!"

F*** off nVidia. Seriously, you can go pound all the salt in the dead sea.

 

[takaozo]

It's not like the end for both them, China will get the chips from black market.
The problem Nvidia has is not being able to sell direct. This means that others will benefit from transactions. And those transactions will be way more that what they get.
Nvidia is afraid to lose the status of the only one that makes the most income from this sales.
We know how they feel about AIB's now and what "leftovers" margins they provide to them. EVGA is the company that left the boat not long ago because of this. EVGA CEO said something like Nvidia didn't consider AIB's have that much to do with RTX/GTX success and that the main R&D is Nvidia. This means that Nvidia will get most of the margins and AIB's whatever they can from selling GPU's.
I just imagine the faces at NV when they found out that someone will "scalp" the AI market instead of them...

 

[SRB]

Since they're basically saying that "Nvidia IS AI", and if we can't make as much money as we want, the US will suffer, why not just put their beliefs to the test. Why don't they just tell the US gov. to screw off and sell what they want when they want. What are they going to do? According to Nvidia, without them, there is no AI. Besides, as with most companies invested in China....they've already paid for their entrance into the Chinese market by either giving away or having had their IP stolen.

 

[yRaz]

Since they're basically saying that "Nvidia IS AI", and if we can't make as much money as we want, the US will suffer, why not just put their beliefs to the test. Why don't they just tell the US gov. to screw off and sell what they want when they want. What are they going to do? According to Nvidia, without them, there is no AI. Besides, as with most companies invested in China....they've already paid for their entrance into the Chinese market by either giving away or having had their IP stolen.

If they break the embargo they can't do businesses that adhere to the agreement. That means TSMC won't be able to sell to nVidia and that companies like Google won't be able to purchase nVidia products. Games companies won't able to take their money to implement things like DLSS.


It's a much bigger deal than just selling to China. For example, if Apple did business with nVidia after they did business with China then Apple wouldn't able to sell their products in the US or EU.

On the surface it seems small but there are far reaching effects that are not immediately apparent

 

[wiyosaya]

It's not like the end for both them, China will get the chips from black market.
The problem Nvidia has is not being able to sell direct. This means that others will benefit from transactions. And those transactions will be way more that what they get.
Nvidia is afraid to lose the status of the only one that makes the most income from this sales.
We know how they feel about AIB's now and what "leftovers" margins they provide to them. EVGA is the company that left the boat not long ago because of this. EVGA CEO said something like Nvidia didn't consider AIB's have that much to do with RTX/GTX success and that the main R&D is Nvidia. This means that Nvidia will get most of the margins and AIB's whatever they can from selling GPU's.
I just imagine the faces at NV when they found out that someone will "scalp" the AI market instead of them...

Yes, and about China using US tech - from where ever they got it - there's this interesting story in the news today. https://interestingengineering.com/innovation/chinese-spy-balloon-us-tech

 

[wiyosaya]

Since they're basically saying that "Nvidia IS AI", and if we can't make as much money as we want, the US will suffer, why not just put their beliefs to the test. Why don't they just tell the US gov. to screw off and sell what they want when they want. What are they going to do? According to Nvidia, without them, there is no AI. Besides, as with most companies invested in China....they've already paid for their entrance into the Chinese market by either giving away or having had their IP stolen.

IF Nvidia were to do so, there would be some serious consequences from the US. Read up on ITAR

 

[Nobina]

No! Please! Don't force Nvidia into having to go back to making decent GPUs again, gamers won't have them!

 

[captaincranky]

None of you have mentioned the potential for this marginally insignificant slight against against Communist China, to turn into WWIII. THE CCP has never relinquished the standpoint that Taiwan belongs to them. The US, "official position" is that there is "one China". (With an extant subtext, stating that, "y'll better leave it the f**k alone).
China is in the process of a massive military buildup, with an emphasis on their navy. Besed on the pretext that the "imperialist US, uses it's carrier strike groups to "project power", (which we do), and wants a much larger piece of that privilege, if not supremacy.

Now Nidia's base chips.come from TSMC, which is, (ostensibly), a "Chinese company". (One China, remember?).However, given TSMC's recent investments in the mainland US, which renders it a "multi-national" corporation. Which collaterally forces the US into a "mutual defense pact" to defend it's (TSMC's) interests. TSMC doesn't even have to have its US fabs up and running yet to be regarded in that way.

Now, of late China has been extremely provocative both in air and sea operations in the international waters of the south China sea. You have to wonder when "road rage" will set in, and the US might take some active retaliatory measures against these actions.,

So, the bottom line is, "how do you truly stop, "China from selling Chinese goods to a Chinese company", without some form of escalation as a consequence?

 

[psycros]

None of you have mentioned the potential for this marginally insignificant slight against against Communist China, to turn into WWIII. THE CCP has never relinquished the standpoint that Taiwan belongs to them. The US, "official position" is that there is "one China". (With an extant subtext, stating that, "y'll better leave it the f**k alone).
China is in the process of a massive military buildup, with an emphasis on their navy. Besed on the pretext that the "imperialist US, uses it's carrier strike groups to "project power", (which we do), and wants a much larger piece of that privilege, if not supremacy.

Now Nidia's base chips.come from TSMC, which is, (ostensibly), a "Chinese company". (One China, remember?).However, given TSMC's recent investments in the mainland US, which renders it a "multi-national" corporation. Which collaterally forces the US into a "mutual defense pact" to defend it's (TSMC's) interests. TSMC doesn't even have to have its US fabs up and running yet to be regarded in that way.

Now, of late China has been extremely provocative both in air and sea operations in the international waters of the south China sea. You have to wonder when "road rage" will set in, and the US might take some active retaliatory measures against these actions.,

So, the bottom line is, "how do you truly stop, "China from selling Chinese goods to a Chinese company", without some form of escalation as a consequence?

China isn't going to start anything serious. Ever since they embraced capitalism they've become just as addicted to US dollars as Wall Street itself. They'll do nothing to directly jeopardize that. As another stated earlier, they'll get their chips by hook or by crook and pay through the nose for them. If the US is smart it'll have its spooks embedded in that black market funneling plenty of defective silicon to China.

 

[captaincranky]

China isn't going to start anything serious. Ever since they embraced capitalism they've become just as addicted to US dollars as Wall Street itself. They'll do nothing to directly jeopardize that. As another stated earlier, they'll get their chips by hook or by crook and pay through the nose for them. If the US is smart it'll have its spooks embedded in that black market funneling plenty of defective silicon to China.

Keep in mind that China has crippled American manufacturing capability to an (arguably) fairly extensive degree in the process.

How much would you rather pay someone to build you a new aircraft carrier? Maybe something on the order of $4.00 an hour to a Chinese worker, or possibly as much as $40.00 an hour for good old union affiliated US worker..

Your viewpoint only addresses the economic front. It completely ignores the other entities with skin in the game. Such as the military establishment, the state department, the ideologues, and so forth. Each of which can have a dramatic effect on the action of another.

Economic "dependency", is only being reinforced by the greed of the American consumer.. And not, I might add, to the US' benefit.

Can you say "conquistadors"

Historical data suggest that for most of the 20th century, from 1900 through the 1960s, at least 90% of Latin America's population was Catholic (See History of Religious Change). Today, the Pew Research survey shows, 69% of adults across the region identify as Catholic.

Can you say, "USSR"? The USSR ran out of money, and then collapsed.

But in the case of US / China economic interdependence, (by your own words), we're actually funding the CCP's expansionist policies.

Do you remember Hong Kong being returned to China, and how long its "self governance" lasted thereafter?

So you remember Teinanmen Square?

1989 Tiananmen Square protests and massacre - Wikipedia

en.wikipedia.org

IMO, it would not be in our best interest to brush off the CCP so lightly.

 

[Watzupken]

It's very ironic that US is claiming that they want to fix their deteriorating relationship with China, and continue on the path to sanction them. Does that even make sense? Any sane person tried fixing a broken relationship this way? And to be honest, I feel it is not just Nvidia that is unhappy that they are losing revenue due to political reasons. At some point, these big organisations may reject these sanctions because their bottom line is taking a significantly hit.

 

[Vanderlinde]

Your really pushing china to pour in billions in chip development too. In a decade they could design chips that where even more powerfull then Nvidia's current or future generation, ones.

 

[hahahanoobs]

AMD not mentioned once in an important article relating to AI. Shocker.

 

[yRaz]

AMD not mentioned once in an important article relating to AI. Shocker.

What AI products, exactly, does AMD have? Also, the article was literally about what NVIDIA SAID about the sanctions

 

[captaincranky]

It's very ironic that US is claiming that they want to fix their deteriorating relationship with China, and continue on the path to sanction them. Does that even make sense? Any sane person tried fixing a broken relationship this way?

Ya know, in baseball, sometimes you have to throw a high, way inside fast ball to "reclaim the plate".

Submission isn't a tactically sound negotiating strategy.

BTW, did you know the Chinese are installing a military base in Cuba? Now there's "negotiating in good faith", in action. Do you remember the "Cuban Missile Crisis"?

As for you comparing this to interpersonal relationships, face facts, once she makes up her mind to leave, you can capitulate to her terms and beg til you run out of air, but she's gone, and plans to stay gone.

 

[captaincranky]

AMD not mentioned once in an important article relating to AI. Shocker.

Nobody wants to listen to Jensen Huang poor-mouthing. That should be a given.

AMD really hasn't said anything yet. I guess they're content to drive around the fire, instead of straight through it. Or maybe, they're lining up black market contacts, and are avoiding the unnecessary attention that whimpering out loud would bring them.

In the meantime, mean old nasty Intel, the arch villain of the chip world, is trying to shoehorn its way into the GPU world, with chips made in the USA. How dare they?

What a tragedy it would be if Nvidia's value dropped below a trillion dollars. Why, poor Jensen wouldn't even be able to afford saddle soap.

 

[wiyosaya]

Keep in mind that China has crippled American manufacturing capability to an (arguably) fairly extensive degree in the process.

How much would you rather pay someone to build you a new aircraft carrier? Maybe something on the order of $4.00 an hour to a Chinese worker, or possibly as much as $40.00 an hour for good old union affiliated US worker..

The US getting one of their Air Craft Carriers, or any highly classified military piece of equipment or even something like the JWST, built in China would NEVER (sorry for the emphasis, Captain) happen. That would be a SURE way to put the US' latest and greatest technology into Chinese hands. Not only that, but it would be a complete violation of ITAR and ironically by the US government itself. I hate to point this out, but there is no argument on this basis. It would never happen.

The US still has plenty of US based military/aerospace contractors that do all the work on things like military hardware, space telescopes and the like, right here in the US. I don't know that you are aware of it, but you need a security clearance to work even on things like US space probes and Chinese nationals would not qualify for such a clearance.

As I understand it the Chinese economy is hurting as it is which is supposedly as a result of the recent policies by the Biden administration which, unlike those by the Trump administration, do not force the US consumer to pay the tariffs.

I'm not so sure that if push came to shove the Chinese would be dumb enough to tank their economy even further. Its one thing to stomp around the playground and play bully, as China has been playing at recently, its another thing to pick a fight where both sides would lose and both sides know they would lose especially if the Nuclear Genie were let out of the bottle.

 

[captaincranky]

The US getting one of their Air Craft Carriers, or any highly classified military piece of equipment or even something like the JWST, built in China would NEVER (sorry for the emphasis, Captain) happen. That would be a SURE way to put the US' latest and greatest technology into Chinese hands. Not only that, but it would be a complete violation of ITAR and ironically by the US government itself. I hate to point this out, but there is no argument on this basis. It would never happen.

-I'm sorry that my syntax was so terrible that you were able to pull these rather bizarre conclusions out of it.

As it stands, China would need at least a decade to catch up with our naval capacity.

My apparently murky innuendo was that if China wants more aircraft carriers, then can have them built with $4.00 an hour labor costs.

Whereas, if we want another carrier, we will be building it with $40.00 an hour labor here at home.

My actual point was, it will be a whole lot easier, and cheaper, for them to play "catch up", than it would, or will be, for us to play, "stay ahead".