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Nvidia (NVDA) and AMD are two of America’s top chipmakers in the tech industry due to their quality craftsmanship.
While China is one of their leading customers, Nvidia and AMD recently received the order to cease sale of their technology to China.
The reason being that their technology could be used for artificial intelligence.
The order
On Wednesday, the two chipmakers revealed that the US government ordered them to halt the exports of high-performance chips to the second largest economy in the world.
Nvidia’s statement
Nvidia shared during a regulatory filing that it was told by US officials that the request came from a potential risk of the products being used by, or diverted to, a “military end user.”
The restriction falls on Nvidia’s A100 and the upcoming H100 integrated circuits, along with any systems that include the two chips.
According to the company, the command is effective immediately.
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How it affects sales
According to the filing, the decision could upend $400 million worth of business for the company.
The numbers were crunched by the California-based tech giants last week when they discussed potential sales to China.
As a result, their projection could be affected by the new requirement.
The two companies also suffered a drawback when Nvidia shares fell 6.6% in after-hours trading on Wednesday.
Meanwhile, AMD stock went down by 3.7%.
Nvidia is currently working with its customers in China in an attempt to “satisfy their planned or future purchases with alternative products and may seek licenses where replacements aren’t sufficient.”
AMD
AMD was also given the new requirements by the US Department of Commerce, which will hit shipments of its MI250 integrated circuits to China.
The company released a statement regarding a different line of components, saying:
“At this time, we do not believe that shipments of MI100 integrated circuits are impacted by the new requirements.”
“We do not currently believe it is a material impact on our business.”
US-China tensions
The order and requirement showcase how tensions between the United States and China overshadow the business and tech industry among others.
The two countries reached an agreement last auditing US-listed Chinese companies that had suggested a breakthrough in relations.
Despite the progress, experts warned that the deal will only play a minor role in resolving other key issues.
Nvidia and AMD’s orders also stretch out to export bans to Russia.
The two companies said they don’t currently sell products there, having halted sales after the invasion of Ukraine earlier this year.
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China reacts
News of the decision reached Chinese officials who have opposed the decision.
State media called the US out, saying, “Actions from the United States deviated from the principle of fair competition and violated international economic and trade rules.”
Beijing also released a statement that reads:
“The US side should immediately stop its wrongdoing, treat companies from all over the world including China fairly, and do more things that are conducive to the stability of the world economy.”
Meanwhile, the US Commerce Department responded to their statement.
“We are taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and users to protect US national security and forreign policy interests,” said a Commerce Department spokesperson.
“This includes preventing China’s acquisition and use of US technology in the context of its military-civil fusion program to fuel its military modernisation efforts, conduct human rights abuses, and enable other malign activities.”
References:
US chip makers hit by new China export rule
US orders Nvidia and AMD to stop selling AI chips to China
Tech giants Nvidia and AMD ordered to halt exports to China
Nvidia and AMD, two tech giants, receive orders from the US government to cease exports to China
US government orders Nvidia and AMD to halt exports to China
