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Nvidia (NVDA) and AMD are two of the leading American chip makers in the tech industry for their high-quality craftsmanship.
Recently, Nvidia and AMD received orders to stop selling their technology to China despite China being one of their main customers.
The reason for this is that their technology can be used for artificial intelligence.
The order
On Wednesday, the two chip makers announced that the US government had ordered them to stop exporting high-value chips to the world’s second largest economy.
Nvidia
Nvidia shared in a regulatory filing that it was said by US officials that the request stemmed from a potential risk that the products would be used or diverted to a “military end user.”
The limitation falls on Nvidia’s A100 and its upcoming H100 ICs, along with any systems that include the two chips. According to the company, the order is effective immediately.
How this affect sales
According to the filing, the decision could upend $400 million in deals for the company.
The figures were compiled by the California-based tech giants last week as they discussed possible sales to China.
Therefore, your projection might be affected by the new requirement.
Both companies also suffered, with Nvidia stock falling 6.6% in after-hours trading on Wednesday. Meanwhile, AMD stock is down 3.7%.
Nvidia is currently working with its customers in China to try to “satisfy their proposed or future purchases with alternative products and may seek licenses where replacements are insufficient.”
AMD
AMD has also received new requirements from the US Department of Commerce, which will respond to shipments of its MI250 ICs to China.
The company released a statement on a different 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
Order and demand shows how tensions between the United States and China are overshadowing trade and technology industries, among others.
The two countries recently agreed to audit Chinese companies listed in the United States that had suggested 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 from Nvidia and AMD also extend export bans to Russia.
The two companies stated that they currently do not sell any products there because they stopped selling following Ukraine’s invasion earlier this year.
China responds
News of the decision reached Chinese officials who opposed the decision.
Calling out the United States, the state media 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 saying:
“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.”
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