Nvidia and AMD to Stop Selling Processors to China

Closeup image of the Nvidia GeForce RTX graphics card
Nvidia is currently one of only two manufacturers experiencing the ban, together with AMD.

On Wednesday, 31st of August, the Santa Clara-based chip designer, Nvidia, announced it will stop sales of its two future flagship CPUs to China. In the announcement, the company also revealed this move was due to a request by US officials. 

Nvidia’s biggest competitor, AMD, has experienced a similar ban, affecting one product. With these bans, the US aims to limit China’s chances to use American platforms for high-end AI software development capabilities.

The ban currently affects these 3 products

  1. Nvidia A100
  2. Nvidia H100
  3. AMD MI250

Given these chips’ nature, the ban should not affect consumer markets in Europe or the US. Namely, the chips in question are specifically made for professional uses and to compute problems such as machine learning and Artificial Intelligence development.

The AMD Instinct MI250, which came out in November last year, is an amazing GPU, offering 3,277 GB/s in memory bandwidth, which is three times as much as the Nvidia 3800 Titan. But, it does not allow DirectX and would not run any new games, nor was it meant to.

Only a Few CPUs Are Affected

The news around banning CPU and GPU sales to China has affected the market significantly, with Nvidia’s stock dropping 6.6% and AMD following with a 3.7% drop. Nvidia disclosed that this move threatens roughly $400M in future business.

This, however, does not indicate a complete block in Chinese markets for chip producers, with the US approving a vast majority of tech sales to the People’s Republic. For the general consumer market, blocked chips are not even interesting.

The biggest issue is that the banned chips represent flagship models in the professional world. Nvidia reported this ban might hinder A100 and H100 chip development, which would also affect global sales.

Reportedly, the company has applied for an exemption, pointing out that their new cards do not serve any military purpose. US officials, on the other hand, have not confirmed whether they will grant this exemption. 

Image of a motif of an Asian dragon on top of a building, taken in Singapore.
China might still be growing its economy, but is slowly facing rising issues.

Preventing AI AI Proliferation in China

The People’s Republic of China might not be at the very forefront of AI development, even with some significant strides made by local developers. They are, however, the biggest AI user, especially on the national level.

The country uses AI for public services and social programs alike, such as the social credit system, and law enforcement. AI in China oversees facial and speech recognition to prevent what the government calls “antisocial behavior”.

With the current economic issues within China, followed by growing citizen discontent, advances in law enforcement are also a concern for the Central State. Even with economic growth, the country is under economic pressure due to pandemic restrictions and the potential real estate bubble burst.  

Still, adversaries such as the US are more concerned about AI military applications, not the possible social problems arising in China. Namely, the new cards may take ML to a new level, allowing it to recognize, report, and monitor satellite images of military movements worldwide.

AI Leaps Still Far from a Singularity

It is only a matter of time before computers become self-aware and transform into people—in the social sense. And although humanity should probably never reach this point, people are reluctant to listen.  

Still, similar to nuclear fusion, AI sentience always seems to be several decades away. Even with the new advancements in machine learning, this problem is far from reaching singularity. 

So far, AI can observe and report vast amounts of data. It also can recognize patterns, faces, and objects without major issues and with very good accuracy. In terms of regular intelligence, AI has surpassed humans many times over, but still with no advancements towards sentience.

An AMD Ryzen Spire cooling fan with LED lighting on the side.
AMD might be under less stress because their sales of MI250 to China were not as substantial so far.

China Might Have Other Options

Due to the current political tensions between the US and China, other US-based chip manufacturers—including Intel, IBM, and Apple—will likely not sell products to China as competitors. 

Still, some manufacturers might not be as concerned by US foreign policy as those based in the US. Primarily, the China-based Semiconductor Manufacturing International Corporation (SMIC) has been making solid advancements in Chip production.

Additionally, Korean manufacturers such as Samsung and SK Hynix are following suit. Even though these companies focus more on storage memory, they might try their luck with the Chinese market. 

Finally, manufacturers from Germany, France and Italy, the UK, and Israel might come up as competitors. Conversely, manufacturers in Japan, especially in Taiwan, are even less likely to allow probable military tech sales to China than the US, so Nvidia and AMD will likely not have much competition on this front.

USA and China to Lead through a Rocky Future

According to the leaked internal memo from the founder of Huawei, Ren Zhengfei, China is marching toward a difficult period. Due to global economic changes, severe political changes will ensue, as history has witnessed repeatedly. 

Economic and political giants, such as the US and China, are bound to be at the forefront of such changes, for better or for worse. The US is also facing much of China’s economic problems, with issues concerning housing and rising consumer prices. 

Unlike the US, China does not have a big push toward remote working. Rather, it still focuses more on corporate models. Still, the communist state is under pressure, and it might end up following the small business model prevalent in the US.

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