The US has imposed new restrictions on NVIDIA, barring them from exporting AI chips to countries in West Asia, also known as the Middle East. The US believes that China may try to find ways around sanctions by acquiring AI GPUs through other countries they are working with
It seems that the US is further tightening the screws on China, and ensuring that they do not get their hands on any NVIDIA AI chips, especially through countries with whom it is working on AI.
The US has imposed a fresh set of restrictions on NVIDIA, which stops them from exporting AI chips to certain countries in West Asia. This is in addition to the restrictions that have already been imposed on exports to China. The reason why West Asian countries were at the receiving end of this trade restriction, may have to do with the fact that most countries in the region are working with Chinese tech companies to develop their own AI bots and LLMs.
NVIDIA recently announced an extension of its export restrictions for advanced artificial intelligence chips, which was previously applicable to China, and will now include additional regions such as certain West Asia countries. This development was mentioned in a regulatory filing which was released publically this week.
Surprising, but now exactly
US authorities often use export controls, citing national security issues. This was at its height last year when the US escalated measures aimed at curtailing China’s technological capabilities. However, the specific risks associated with exports to West Asian countries remain unclear.
In a separate communication, Nvidia clarified that this new licensing requirement “does not affect a significant portion of our revenue.” The company is actively collaborating with the US government to address this matter.
NVIDIA stated that these restrictions were mainly for their A100 and H100 chips, which are designed to accelerate machine-learning tasks. NVIDIA also clarified that the directive was unlikely to have a significant impact on its financial outcomes.
NVIDIA is not the only one to receive such instruction
Last September, NVIDIA competitor Advanced Micro Devices (AMD) also reported being subjected to new licensing requisites that would suspend the export of its MI250 AI chips to China. Following these events, NVIDIA, AMD, and Intel have all revealed intentions to create less potent AI chips for export to the Chinese market.
NVIDIA, without providing an explanation for the fresh restrictions in the filing dated August 28, had mentioned last year that US officials informed them of the regulation’s purpose in addressing potential risks related to products being employed for “military end use” or by a “military end user” in China.
Although NVIDIA did not explicitly specify West Asian countries affected in its recent announcement, it did state that most of its $13.5 billion in sales for the fiscal quarter ending July 30 came from the United States, China, and Taiwan. The remaining countries combined contributed around 13.9 per cent of the sales, with no detailed breakdown for West Asia.
The regulatory filing on August 28 revealed, “During the second quarter of the fiscal year 2024, the US government informed us of an additional licensing requirement for a subset of A100 and H100 products destined to certain customers and other regions, including some countries in West Asia”
West Asia collateral of US-China tech war?
The developments of the previous year coincided with heightened tensions surrounding Taiwan, a major manufacturing hub for chips utilized by NVIDIA and numerous other leading chip manufacturers.
In October 2022, the Biden administration adopted an even more comprehensive set of export controls, which included measures to cut off China’s access to specific semiconductor chips produced globally using US equipment. This action notably extended Washington’s influence in its bid to impede China’s technological and military advancements.
Japan and the Netherlands subsequently implemented similar regulations earlier in the current year.
The unavailability of American AI chips, provided by firms like NVIDIA and AMD, would hinder Chinese entities from cost-effectively undertaking advanced computing tasks, including image and speech recognition, among others.
These capabilities are integral not only to consumer applications like voice-activated smartphones but also have significant military implications, such as analyzing satellite imagery for potential weapons or bases and sifting through digital communications for intelligence purposes.
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