Nvidia Corporation, a company that designs computer chips, was instructed by U.S. officials to stop the export of two of the best computing chips to China for use in artificial intelligence (AI) projects. Apparently, this could severely limit Chinese companies' ability to perform advanced tasks like image recognition and impede Nvidia's Chinese business.

After the news broke out, Nvidia shares dropped by 6.6%.

The business claimed that the ban, which applies to its A100 and H100 chips that accelerate machine learning activities, could obstruct the development of the H100, the company's flagship chip it unveiled this year.

On the contrary, Nvidia's competitor Advanced Micro Devices Inc. (AMD) asserted on receiving additional license requirements that will prevent the export of its MI250 AI processors to China, while claiming its zero impact on its MI100 chips.

The company also mentioned that the new regulations will pose no significant effects on its operations.

The U.S. Department of Commerce stated that although officials are not yet in a position to outline specific policy changes, they are taking a comprehensive approach to carry out additional actions required to prevent advanced technologies from falling in the wrong hands.

Reportedly, this approach will safeguard the U.S. national security and foreign policy interests.

The announcement denotes a noticeable uptick in the U.S.'s campaign against China's technological capacities, as tensions flare over Taiwan’s predicament, wherein Nvidia and nearly all other big semiconductor companies source their chips.

It is worth noting that these chips are of utmost importance in China as they are used in consumer applications such as smartphones that can respond to inquiries and tag photographs using natural language processing. They are also employed by the military for tasks, like searching satellite pictures for bases or weapons, as well as screening digital communications for intelligence gathering.

Interestingly, Chinese firms will not be able to efficiently perform advanced computation needed for jobs, like image and speech recognition, at a reasonable cost, in absence of American chips from companies such as AMD and Nvidia.

Source Credit: https://www.businessworld.in/article/US-Asks-Nvidia-To-Stop-Export-Of-Top-AI-Chips-To-China/01-09-2022-444679/