Chip designer Nvidia has said the U.S. government is banning it from selling two of its top AI chips to China over national security concerns, as Sino-U.S. tensions bubble over the fate of Taiwan, where almost all major chip firms have their products made.
The announcement signals a major escalation of the U.S. crackdown on China’s technological capabilities. According Shu Jieting to China’s commerce ministry spokesperson The U.S. continues to abuse export control measures to restrict exports of semiconductor-related items to China, which China firmly opposes.
Nvidia said it had booked $400 million in sales of the affected chips this quarter to China that could be lost if firms decide not to buy alternative Nvidia products. It said it plans to apply for exemptions to the rule.
Image recognition and natural language processing are common in consumer applications like smartphones that can answer queries and tag photos. They also have military uses such as scouring satellite imagery for weapons or bases and filtering digital communications for intelligence-gathering purposes.
This is not the first time the U.S. has moved to choke off Chinese firms’ supply of chips. In 2020, former president Donald Trump’s administration banned suppliers from selling chips made using U.S. technology to tech giant Huawei without a special license.
Nvidia said it had booked $400 million in sales of the affected chips this quarter to China that could be lost if firms decide not to buy alternative Nvidia products. It said it plans to apply for exemptions to the rule.
Nvidia shares fell 6.6% after hours. The company said the ban, which affects its A100 and H100 chips designed to speed up machine learning tasks, could interfere with the completion of developing the H100, the flagship chip it announced this year.
Nvidia last week forecast a sharp drop in revenue for the current quarter on the back of weaker gaming industry. It said it expected third-quarter sales to fall 17% from the same period last year.
