The US government's increasing concerns over China's reach toward advanced technology have brought AI processor exports under scrutiny. According to a recent Wall Street Journal report, the Biden administration is considering implementing stricter export restrictions on AI chips by July. US tech giants Nvidia and AMD may face significant revenue losses if these proposed restrictions affect the sale of high-margin AI processors.
Nvidia's flagship A100 and H100 AI processors were earlier directed to halt sales in September 2022. However, the US Securities and Exchange Commission intervened, allowing Nvidia to continue supporting US customers of A100 till March 1, 2023. The US government also granted permission for A100 and H100 orders to be fulfilled through Nvidia's Hong Kong facility until September 1, 2023.
With the nearing expiry of this grace period, the dynamics for the tech industry could change considerably. The US government is not just considering limiting AI chip exports but also contemplating restricting Chinese access to cloud services offering AI capabilities. The announcement led to a 2% dip in Nvidia shares. Despite this, Nvidia continues to thrive, with the company's year-to-date share price up by over 181% and a market capitalization exceeding a trillion dollars.
There is no denying that Nvidia's GPUs, such as the Hopper-based H100, are witnessing a surge in demand. They are much sought-after for diverse applications such as chatbots, automation, cybersecurity, and controversial uses like facial recognition and military applications. It is the potential misuse of technology that fuels the US government's concern about exports to China.
In conclusion, the evolving situation between the US and China in the technological domain is laden with profound implications. While previously, the US had coerced chipmaking equipment manufacturer ASML into discontinuing sales of advanced chipmaking tech to China; these latest measures are only likely to strain the relationship further. The stakeholders, including tech giants like Nvidia and AMD, should brace for potentially challenging times ahead.