The U.S. isn’t keen on helping China improve its computing prowess and has asked many chip manufacturers to stop exporting chips to the country. This abrupt move will require companies like Nvidia and AMD to stop selling the hardware to China. They have no other option but to bow down to the request.
This action stems from speculation that supplying ML chips designed by Nvidia could be used for nefarious purposes. It could also be a geopolitical move to weaken ML-powered infrastructure in China.
Why did the U.S. impose such a ban on Nvidia?
According to Reuters, this is an extremely geopolitical move to cripple AI advancements in China. A U.S. government official recently visited Taiwan, a controversial topic for China. Moreover, China conducted (and still is) military drills in and around Taiwan, a country that is the most powerful manufacturer of chips and semiconductors.
While this may be a political move, Nvidia will suffer huge losses due to it for some time. Its stock price fell sharply after the news about the ban broke, and the market reacted strongly to the change. A 6.6% drop in stock price can easily send shivers down the spine of any stakeholder in the company. Similarly, AMD’s stock price fell by 3.7% after the news of the ban.
The U.S. government has directed Nvidia not to export the A100 and H100 chips designed for ML use cases. It is not a complete ban, and Nvidia can continue to sell other chips barring these two. Nvidia claimed that the ban would impact the M100 chip, which is in development. On the other hand, AMD said that the ban wouldn’t hamper the development and production of the MI100 chips.
According to Reuters, Nvidia said, “U.S. officials told it the new rule “will address the risk that the covered products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China.” Both countries are using trade as a medium to cripple each other’s military prowess. But such abrupt actions may send companies like Nvidia down the drain.