The Biden administration updated its export control regulations for artificial intelligence (AI) chips on October 17, planning to prevent companies such as Nvidia from exporting advanced AI chips to China. After the news was announced, Nvidia's stock price fell by nearly 5%, AMD's stock price fell by more than 2%, and Intel's stock price fell by 1.7%.
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According to the latest rules, Nvidia’s chip exports to China, including the A800 and H800, will be affected. The new rules will take effect after 30 days of public comment.
NVIDIA responded to China Business News: "We comply with all applicable regulations and strive to provide thousands of application products that support different industries. Given the global demand for our products, we do not expect (new regulations) to have a material impact on our financial performance in the short term."
These restrictions will also affect the sales of chips to China by companies such as AMD and Intel, including chip equipment manufacturers such as Applied Materials, Lam Group and KLA. This is due to new measures that expand licensing requirements for the export of advanced chips to more than 40 additional countries outside China and impose licensing requirements for chip manufacturing tools in 21 countries outside China, expanding the list of equipment prohibited from entering these countries.
In addition, the new measures are designed to prevent companies from bypassing chip restrictions through Chiplet's chip stacking technology.
U.S. Commerce Secretary Gina Raimondo said the new measures were aimed at "closing loopholes" and said they would likely be updated at least annually in the future. "The new restrictions will only affect a small part of chip exports to China," she said. Chips used in consumer products such as game consoles or smartphones will not be subject to export controls.
In October last year, the United States implemented bandwidth rate restrictions on AI chips exported to China, involving Nvidia A100 and H100 chips. Since then, Nvidia has provided alternative versions of the A800 and H800 to Chinese companies. A Chinese computer manufacturer disclosed details that the H800 server is identical in all aspects to the H100 chip sold elsewhere in the world, except that the transfer rate is reduced to 400GB per second.
Although U.S. export restrictions have heightened concerns about Nvidia's chips entering the Chinese market, Nvidia's business is still soaring from the financial report. This is mainly driven by the demand for research and development of large AI models this year.
The quarterly financial report as of July 30 showed that Nvidia’s net profit for the quarter reached a record high of US$6.7 billion, a surge of 422% year-on-year; revenue also surged 171% year-on-year to US$13.5 billion; the company’s gross profit margin increased by more than 25 percentage points from the same period last year, reaching 71.2%.
Nvidia will announce its third-quarter financial results next month. The company expects third-quarter revenue of about $16 billion, much higher than analysts expected.