On Wednesday, Nvidia Corp disclosed that US officials had ordered the chip designer to halt the export of its leading artificial intelligence (AI) computing chips to China.
This would make it difficult for Nvidia to operate in the country and also make it difficult for companies to perform advanced functions, such as image recognition.
Crackdown on China
This latest move marks an escalation of the crackdown by the United States government on the technological capabilities of China.
It is in light of geopolitical tensions about the fate of Taiwan, where almost every chip maker, including Nvidia, manufacture their chips.
There was a 6.6% drop in the shares of the chip maker after hours. The company further added that it would become difficult for it to complete the H100 flagship chip, which it had announced this year.
The ban in question will have an impact on Nvidia’sH100 and A100 chips that are aimed at speeding up tasks associated with machine learning.
After hours trading also saw a drop of 3.7% in stocks of competitor Advanced Micro Devices Inc. A spokesman for the company said that they had also received new licensing requirements.
As per the new requirements, its M100 chips can be exported, but it will have to pullback from exporting its MI250 AI chips.
It also added that the new rules were unlikely to impact its business materially.
No details
According to the US Department of Commerce, it is going over its practices and policies related to China in order to ensure that advanced technologies do not end up in the wrong hands.
However, it did not provide any details about the criteria it used for imposing the ban on shipments of AI chips to China.
A spokesperson said that they could not provide details about specific changes in the policy, but added that they were taking the right actions related to technologies to protect the foreign policy and national security interests.
China responds
On Thursday, a response was also issued by the foreign ministry in China, which accused the US of trying to impose a ‘tech blockade’ against the country.
The Chinese commerce ministry said that global supply chains would suffer because of these actions, which are already quite unstable.
A spokesperson for the Commerce ministry also said that the US was restricting the export of semiconductor-related items, which is exploitation of export control measures.
The spokesperson said that they were against such a move. It should be noted that this is not the first time for the United States to cut off the supply of chips to Chinese companies.
The administration of Donald Trump, the former president of the US, had also imposed a ban on sale of chips to Huawei that were developed with US tech.
The latest move will put Chinese companies in a fix because it will become difficult for them to perform advanced computing tasks in a cost-effective way, if they cannot access chips from Nvidia and AMD.
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