US bars 'advanced tech' firms from building China factories for 10 years || newbdonline

US bars 'advanced tech' firms from building China factories for 10 years

Shares of major chipmakers Nvidia and AMD have fallen amid concerns of new US restrictions on the sale of artificial intelligence chips to China.

 

In order to handle the possibility that chips could be "used in, or diverted to a'military end use'... in China and Russia," according to Nvidia, the US government needs a new license that is in place immediately.

There are worries that the rule will result in millions of dollars in revenue being lost.

Both chipmakers' stock prices dropped in New York's after-hours trading.

Shares of AMD fell 3.7% while those of Nvidia fell 6.6%.

For Nvidia, the new limitations represent a "gut punch," according to Dan Ives of Wedbush Securities, who spoke to the BBC.

 

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Chinese authorities have vehemently criticized the most recent action. The United States' actions "deviated from the idea of fair competition and breached international economic and trade regulations," according to official media.

Beijing issued a statement in which it demanded that "the US side immediately cease its wrongdoing, treat firms from all over the world fairly, including Chinese companies, and do more things that are favorable to the stability of the global economy."

According to a statement to the BBC, the US Commerce Department is "not in a position to specify particular policy adjustments at this time."

 

A representative for the Commerce Department stated, "We are taking a holistic approach to implement additional policies necessary linked to technology, end-uses, and end-users to defend US national security and foreign policy interests.

This includes blocking China from obtaining and utilizing US technology as part of its military-civilian fusion program to support its military modernization efforts, engage in human rights abuses, and facilitate other nefarious actions.

In a US regulatory filing on Wednesday, The new license requirement, according to Nvidia, will affect the export of systems that use its A100 and H100 chips, which are intended to accelerate machine learning activities.

Nvidia continued, "If customers do not wish to acquire the company's alternative product offerings or if the (US government) does not provide licenses in a timely manner or denies licenses to significant customers," around $400 million (£345.2 million) in sales to China might be impacted.

 

A representative for Nvidia told the BBC that the company was in contact with Chinese consumers "to satisfy their planned or future orders with other products."

A representative for AMD stated that the regulations, which forbid the export of its MI250 chips to China, were not anticipated to have "a major impact" on business.

Following the invasion of Ukraine in February, shipments to Russia were banned by both Nvidia and AMD.

According to analysts, China may find it more challenging to purchase chips for advanced computing as a result of US restrictions.

 

It might also have an impact on the profits of US manufacturers like Nvidia and AMD, according to Mario Morales, a market research analyst located in California.

Both companies are heavily exposed to China and may have additional effects in the future, particularly if China decides to respond, according to Mr. Morales.

 

Rising tensions

 

Nvidia said last week that second-quarter revenue of $6.7 billion fell far short of expectations.

However, it reported that income from its data center business—which makes computer chips—rose by 61% over the same period last year.

 

"This is basically a geopolitical shot across the bow at China, and it's going to really feed those flames (tensions). Nvidia is a victim of collateral damage "Ives stated.

The US and China are embroiled in a protracted trade and technological conflict.

Following US lawmaker Nancy Pelosi's contentious trip to Taiwan earlier this month, tensions between the two largest economies in the world increased.

The autonomous island is considered to be a part of Chinese territory, and China argues that it should be united with the mainland, using force if necessary.