U.S. chipmakers to be impacted by Nvidia’s acknowledgment of AI chip export restrictions to China

Nvidia has warned that imposing additional U.S. export restrictions on its chips to China would have dire consequences for American semiconductor companies, potentially resulting in a permanent loss of dominance in one of the world’s largest markets.

There have been reports suggesting that Washington is considering new export curbs on artificial intelligence-related chips, a market in which Nvidia plays a significant role. The company is already facing limitations on the sale of its top-end A100 and H100 graphics processing units to China.

During Nvidia’s recent earnings call, CFO Colette Kress acknowledged that while the current regulation has not had an immediate impact on its financial results, long-term restrictions on the sale of data center GPUs to China could lead to a permanent loss of opportunities for the U.S. industry.

Nvidia previously introduced modified and slowed-down hardware to comply with existing export controls.

Despite the potential challenges, Nvidia reported strong financial results for the June quarter, with its data center business, heavily reliant on revenue from China, growing by 171% year-on-year to reach a record $10.32 billion.

It is important to note that the U.S. export restrictions aim to prevent China from acquiring technology with potential military applications. The ongoing battle for technological supremacy between the two countries has put semiconductors in a contentious position.

Nvidia’s chips, known for their superior performance in data centers and their ability to facilitate AI model training, are highly sought after by Chinese companies working with massive data sets.

Despite geopolitical concerns, Nvidia’s stock has experienced substantial growth this year, rallying over 220%. The company anticipates strong revenue growth in the September quarter, nearly tripling year-on-year.