Nvidia Claims the U.S. Government Is Open to A.I. Chip Development in China

Nvidia‘s data centers business, which includes the sales of the A100/H100, is one of the company’s fastest-growing segments.

It reported $3.8 billion in sales for the June quarter, an increase of 61% annually.

Nvidia CEO Jensen Huang warned analysts that Chinese cloud companies were slowly building their data centers. He also said that China was a large market for the company. Nvidia announced Thursday that it will continue shipping AI chips from its Hong Kong plant until September 2023.

Huang stated that the Chinese hyperscalers, and Chinese Internet companies, have slowed infrastructure investment in this year, especially starting in — they have been slow to build out and really accelerate — well slowed it down in Q2.”

Analysts believe Nvidia could mitigate the effects of the new export restrictions if it works with the government. However, it is unclear whether the Chinese government will retaliate by imposing its own bans.

Harlan Sur, a JPMorgan analyst, wrote that while there are immediate and intermediate risks to the ban on exports, Nvidia is working closely to negotiate the situation. He also stated that the USG is fully conscious of the strategic/critical importance of Nvidia’s accelerated computing platform for the global tech sector.

Although the Department of Commerce stated that the new export restrictions were related to national security it did not answer any follow-up questions regarding whether or not it clarified or modified the policy for Nvidia.

A representative from the Department of Commerce stated Wednesday that while we cannot make specific policy changes, they are taking a comprehensive approach in order to implement additional actions related to technologies, ends-uses, and end-users to safeguard U.S. foreign policy and national security interests.

AMD also stated Wednesday that it had received new license requirements from the Department of Commerce. However, AMD did not expect these to have a material impact on its business due to lower China exposure. AMD shares fell by more than 4% in trading on Thursday.