Nvidia warns of potential harm to American chip developers due to stricter export controls on Chinese AI and supercomputer sectors
Nvidia, which sells its AI and HPC chips to Chinese cloud providers, is warning that American chip developers could face harm if the U.S. government increases restrictions on the Chinese AI and supercomputer sectors. The chipmaker, which claims its financial outlook is “strong,” says that the immediate effects will be minimal, but that it sees the potential for additional export controls on AI-oriented hardware as a long-term risk.
In a presentation sent to investors, which accompanied an earnings call, Nvidia’s chief financial officer, Colette Kress, expresses concern over potential new export rules governing advanced chip hardware.
Last year, the U.S. government established export rules designed to restrict China’s access to certain high-performance computing (HPC) and AI hardware. The regulations prevent the shipment of specific supercomputer parts to China without an export license, and the U.S. government is reportedly aiming to increase restrictions even further, potentially including GPUs made by Nvidia and other companies.
“We are concerned about the potential harm to the American semiconductor industry if the government were to implement the policies that have been reported in the press,” Kress says. “While we have been diligently working to comply with current export regulations, there is always the potential for these regulations to be strengthened and for the government to require us to obtain an export license for all of our products.”
In response to the initial regulations, Nvidia introduced modified versions of its compute GPUs for China, which the company says prevent the country from building energy-efficient supercomputers using U.S. processors. The company says it is optimistic about its immediate financial prospects but acknowledges that a significant portion of its datacenter revenue comes from China, and that it is important for companies to stay on the cutting edge to navigate potential changes in export regulations.
“From a near-term perspective, we do not anticipate an immediate material impact on our financial results if additional export restrictions are implemented,” Kress says. “However, we believe that the potential long-term consequences, if the U.S. industry is permanently deprived of the opportunity to compete and lead in the Chinese market, could be far more detrimental.”
Nvidia’s CEO, Jensen Huang, has also engaged with executives from other companies to warn against the potential negative effects of escalating export controls, according to reports. Ensuring compliance with export regulations is seen as a proactive move, but the fear is that stronger restrictions could negatively impact sales for Nvidia and other companies.
“While we believe that the current regulations are achieving their intended results and we do not anticipate an immediate material impact on our financial results if additional export restrictions are implemented,” Kress says. “We remain concerned that a permanent loss of opportunity for the U.S. industry to compete and lead in the Chinese market would have a long-term detrimental impact to our gross margin and earnings potential.”
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