Due to their high quality craftsmanship, Nvidia (NVDA) and AMD are two of the leading US chipmakers in the tech industry. 

Recently, the US government ordered tech giants to stop selling their technology to China, even though China is one of their major customers.

The reason is that their technology can be used for artificial intelligence.

On Wednesday, the two chipmakers announced that the US government had ordered them to stop exporting high-quality chips to the world’s second-largest economy.

NVIDIA

Nvidia shared a filing motion in which U.S. officials said the decision was made because of a potential risk that the products could be used or diverted to a “military end user.”

The limitation falls on Nvidia’s A100 and upcoming H100 ICs, along with any systems that contain the two chips.

According to the company, the order is effective immediately.

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How does this affect sales?

According to the filing, the decision could wipe out $ 400 million in deals for the company.

The numbers were compiled last week by the California-based tech giant as they discussed potential sales in China.

Therefore, their projection may be affected by the new requirement.

Both companies also suffered, with Nvidia shares down 6.6% in after-hour trading on Wednesday. Meanwhile, AMD’s shares fell 3.7%. 

Nvidia is currently working with its customers in China to try to “satisfy their planned or future purchases with alternative products and may seek licenses where replacements aren’t sufficient.”

AMD

AMD has also received new requirements from the US Department of Commerce, which will affect the shipment of its MI250 ICs to China.

The company released a statement about another set of components, stating:

“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.”

Tensions between the United States and China

The latest order shows how tensions between the US and China are overshadowing the commerce and technology industries, among other things.

However, the two countries recently agreed to review Chinese companies listed in the United States, which has offered a breakthrough in their relationship.

Despite the progress, experts have warned that the deal will only play a minor role in addressing other important issues.

The orders for Nvidia and AMD also extend export bans to Russia.

The two companies said they currently do not sell any products there, as they stopped selling after the invasion of Ukraine earlier in the year.

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China responds

News of the decision reached the Chinese authorities, who opposed the decision. State media responded to the United States and said:

“Actions from the United States deviated from the principle of fair competition and violated international economic and trade rules.”

Beijing also released a statement stating:

“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 Department of Commerce responded to his 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