Major chip manufacturers are concerned about Wednesday’s restriction on sales to China and Russia.
Key details
The U.S. government has restricted chip sales by Nvidia and Advanced Micro Devices to China and Russia—”to keep advanced technologies out of the wrong hands,” the Department of Commerce statement says.
Nvidia stock prices have dropped 13.4% since Wednesday while AMD dropped 8.3%.
“Nvidia announced in a filing to the U.S. Securities and Exchange Commission on Wednesday evening that Chinese customers would be barred from buying its ‘A100 and forthcoming H100 integrated circuits’ and that the company could lose up to $400 million in sales of those high-end chips,” reports Fortune.
“Without American chips from companies like Nvidia and AMD, Chinese organizations will be unable to cost-effectively carry out the kind of advanced computing used for image and speech recognition, among many other tasks,” reports Reuters.
The government says it will offer exemptions to the restriction to certain Chinese customers so long as they aren’t used in military equipment. Nvidia says it plans to file for exemptions.
Why it’s important
Chip manufacturing is an ever-competitive market, and hindering a company’s ability to sell to certain customers restrains its business performance.
The move signals continued and escalating hostility between the United States, Russia, and China, as Chinese hostility toward the island of Taiwan threatens America’s production capability for advanced chips. Russia is still embroiled in a six-month-long war against Ukraine.
“The announcement signals a major escalation of the U.S. crackdown on China’s technological capabilities as tensions bubble over the fate of Taiwan, where chips for Nvidia and almost every other major chip firm are manufactured,” says Reuters.
The Chinese government said today that the U.S. is imposing a “tech blockade” on China.
As we previously reported, Intel Corp is currently attempting to expand its domestic production capabilities and compete more aggressively against East Asian semiconductor rivals. President Joe Biden signed the CHIPS and Science Act on August 9, which sets aside $52.7 billion for semiconductor research and development to help divert chip production away from Taiwan and China.
The US Department of Commerce has yet to lay out its new guidelines for sales abroad, Reuters reports.
