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US restricts exports of AI chips from Nvidia and AMD to select Middle East nations.

ReutersAugust 31, 2023

U.S. Expands Export Restrictions on AI Chips

By Stephen Nellis and Max A. Cherney

The U.S. has expanded its restrictions on the export of ⁣sophisticated ⁣Nvidia and Advanced Micro Devices artificial-intelligence chips beyond China to other regions, including some countries in the Middle East.

Nvidia said in a regulatory filing this week that the curbs, which affect its A100 and H100 chips⁢ designed to speed up machine-learning tasks, would ‌not have an “immediate material impact”⁤ on its results.⁢

Rival AMD also received an informed letter with similar restrictions, a person familiar with the matter told Reuters, adding that the move has no material impact on its revenue.

U.S. officials usually impose export‌ controls for national security reasons. A similar move announced last year‌ signaled an escalation of the U.S.⁤ crackdown on China’s technological capabilities, but it was not immediately clear what risks were posed by exports to the Middle East.

In a ‍separate statement, Nvidia said the new licensing requirement “doesn’t affect⁤ a⁤ meaningful portion of our revenue. We are working‌ with the U.S. government to address⁤ this matter.”

The⁤ U.S. Commerce Department, which normally administers new licensing requirements on exports, did not⁤ immediately return a request for comment.

Last ‌September AMD said it had received new license requirements that would halt exports of its ‌MI250 artificial-intelligence chips to China.

Nvidia, AMD and Intel have since then all disclosed plans to create less powerful AI chips that‍ can be exported to the Chinese market.

Nvidia, which gave no reason for the new‌ restrictions ‌in the filing dated Aug. 28, last year said U.S. officials informed them the rule “will address the risk that⁣ products may be used ⁣in, or diverted to, a ‘military end use’ or ‘military end user’ in China.” ⁣

Nvidia this ‍week did not specify⁢ which countries in the Middle East were affected. The company derived most of its $13.5 billion in sales in its fiscal quarter ended July 30 from the United States, China and Taiwan. About⁤ 13.9% of sales came from all other countries combined, and⁣ Nvidia does ‍not provide a revenue breakout from the Middle East.

“During the second quarter⁣ of fiscal year 2024, the USG‌ (U.S. 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 the Middle East,” Nvidia said in ⁤the Aug. 28 filing.

Last year’s⁤ announcements came as tensions bubbled over the fate of Taiwan,‍ where ⁤chips for Nvidia and almost every other major chip firm are manufactured.

In October 2022, the Biden administration went a step further when it published a sweeping set⁤ of‍ export controls, including a measure to‌ cut off China from certain semiconductor chips made anywhere in ⁢the world⁣ with U.S. equipment. The move vastly expanded Washington’s reach in its bid to slow Beijing’s technological and military advances.

Japan and the Netherlands followed up with similar rules⁤ earlier this year.

Without American AI chips from companies like⁤ Nvidia and AMD, Chinese‍ organizations will⁣ be unable to cost-effectively carry out the kind⁢ of advanced computing used for image ‍and speech recognition, among many other tasks.

Image recognition and natural language processing ⁤are common in consumer applications like smartphones that can answer queries and ⁢tag ⁢photos. They⁢ also have military uses such⁢ as scouring satellite imagery for weapons or ⁢bases and filtering digital communications for intelligence-gathering purposes.

(Reporting by Jasper Ward in Washington, and Ismail Shakil in Ottawa and Stephen ‍Nellis and Max Cherney in San Francisco; additional reporting by Abinaya Vijayaraghavan in Bengaluru Editing by Chris Sanders, Nick Zieminski, Matthew Lewis and Lincoln Feast.)