Nvidia stock falls as U.S. government restricts chip sales to China


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Nvidia’s stock fell on Friday after the U.S. government reportedly placed the company on its list of entities that cannot sell chips to China due to national security concerns, according to CNBC and other media outlets. Nvidia makes graphics processing units (GPUs) used in PCs, servers and mobile devices around the world but is also used in some Chinese supercomputers, according to reports. Nvidia issued a statement saying it has not received any notification from the U.S. government about being on this list and it takes its commitments to U.S laws and regulations very seriously, including those related to export control and sanctions.

Image Source- Reuters

In after-hours trading on Wednesday, Nvidia shares dropped 6.5% after the firm claimed that the United States government is limiting sales in China.

Nvidia said in a filing with the SEC that the U.S. government informed it on August 26 about a new licencing requirement for upcoming shipments to China, including Hong Kong, in order to lessen the possibility that the goods would be utilised by the Chinese military.

The A100 and H100 devices, which are graphics processing units offered to companies, would be impacted by the limitation, according to Nvidia.

The document stated that any future Nvidia integrated circuit that achieves peak performance and chip-to-chip I/O performance levels that are equal to or greater than those of the A100, as well as any system that uses those circuits, are subject to the licencing obligation.

The company now expects it may lose $400 million in potential sales in China, while having previously forecast $5.9 billion in revenue for the current quarter. Despite Nvidia’s claim that it has no paying customers in Russia, the new ban still applies to purchases made there.

Since the Chinese government has been accused of stealing trade secrets and using American technology for military purposes, the U.S. government has tightened export regulations on chips created in the country.

Nvidia said it was asking for permission to carry on with some exports to China but was unsure if the US government would make an exemption.

a representative for Nvidia said “We are working with our clients in China to fulfil their current and upcoming orders with substitute items, and if necessary, we may apply for licences. Only systems that contain the current products A100, H100, and DGX are subject to the new licence requirement.”

A spokeswoman for AMD acknowledged that the U.S. Department of Commerce had also notified the company additional licencing requirements that it believed applied to the MI250 artificial intelligence circuit. AMD claims that the new limitations won’t significantly affect business operations.

According to a department spokesperson, “We are taking a comprehensive approach to implement additional actions necessary to protect U.S. national security and foreign policy interests related to technologies, end-uses, and end-users,” even though we are not in a position to outline specific policy changes at this time.


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