The U.S. government has ordered Nvidia to cease sales and distribution of artificial intelligence acceleration processors in China to avoid their military use in the country.
The order, Nvidia said, would disrupt a business it expects to generate about $400 million in sales this quarter, the company said in a filing with the U.S. Securities and Exchange Commission (SEC) on Wednesday.
The $400 million in expected sales were what the California-based tech giant projected last week in potential sales to China, which could be impacted by the new requirement, it said in the filing.
Nvidia's A100, H100 AI Chips Affected by Order
The order, which details new licensing requirements and is effective immediately, impacts Nvidia's A100 and upcoming H100 chips, which allow AI developers to accelerate their research and develop more advanced AI models. The order could also directly affect the company's ability to finish its development of the H100 "Hopper" chip on schedule, Nvidia further said in its SEC filing.
The U.S. government declared the new licensing requirement would "address the risk that the covered products may be used in, or diverted to, a 'military end use' or 'military end user' in China and Russia," Nvidia said in its filing, noting that it doesn't market its products in Russia.
The order comes amid increasing tensions between the US and China, who claims neighboring Taiwan as its own. China recently concluded war games that launched ballistic missiles into the waters off the coasts of Taiwan, where chips for Nvidia and almost every other major chip firm are manufactured.
The H100, which is expected to be unveiled this year, is designed to assist researchers in tackling complex challenges, such as understanding human language and piloting self-driving cars. Nvidia estimates the H100 is six times speedier than the A100 processor the company rolled out in 2020.
The company said it had expected approximately $400 million in China sales during the third quarter but indicated that figure might be affected by customers being unwilling to purchase alternative products.
Nvidia, AMD Shares Fall Due to US Order
Shares of Nvidia rival Advanced Micro Devices Inc fell 3.7 percent after hours. An AMD spokesman told Reuters the company had received new license requirements that will stop its MI250 artificial intelligence chips from being exported to China, but it believes its MI100 chips will not be affected. AMD said it does not believe the new rules will have a material impact on its business.
Asked for comment, the U.S. Department of Commerce said it would not reveal the new criteria it has set for U.S.-made AI chips that are prohibited for sale in China but said it is reviewing its China-related policies and practices that it said would have "advanced technologies out of the wrong hands."
