After the business claimed that the United States government is limiting sales in China, Nvidia shares dropped 6.5% in extended trading on Wednesday.
According to a filing with the SEC by Nvidia, the U.S. government informed the business on August 26 about a new licensing requirement for upcoming exports to China, including Hong Kong, in order to lower the possibility that the devices would be used by the Chinese military.
The A100 and H100 devices, which are graphics processing units marketed to companies, will be impacted by the restriction, according to Nvidia.
“The license requirement also includes any future Nvidia integrated circuit achieving both peak performance and chip-to-chip I/O performance equal to or greater than thresholds that are roughly equivalent to the A100, as well as any system that includes those circuits,” the document stated.
After having previously projected $5.9 billion in revenue for the current quarter, the corporation now anticipates that it may lose $400 million in potential sales in China. Although Nvidia claimed it doesn’t have any paying clients in Russia, the new rule does apply to sales there.
Because of concerns that Chinese companies would use them for military purposes or steal trade secrets, the U.S. government has increased export restrictions on chips developed with American technology in recent years.
Nvidia stated that it was submitting an application for a license to continue some Chinese shipments, although it is uncertain whether the US government will give an exemption.
“We are working with our customers in China to satisfy their planned or future purchases with alternative products and may seek licenses where replacements aren’t sufficient,” a representative for Nvidia told CNBC. “The only current products that the new licensing requirement applies to are A100, H100 and systems such as DGX that include them.”
CNBC was informed by an AMD spokesperson that the company has also received additional U.S. licensing requirements. Department of Commerce that it thought related to its MI250 circuit, which is designed for artificial intelligence. AMD stated that it didn’t think the new restrictions will have a significant effect on its operations.
According to a department spokesperson speaking to CNBC: “While we are not in a position to outline specific policy changes at this time, we are taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and end-users to protect U.S. national security and foreign policy interests.”