New AI Chip Controls Could Lead to 'Permanent' Loss of China Sales, NVIDIA Executive Says

New potential U.S. export controls on a broader set of artificial intelligence-related chips could have massive impacts on the chip industry and American chipmaker Nvidia, said Colette Kress, Nvidia’s chief financial officer. Kress, speaking about reports that the Biden administration could tighten existing chip export restrictions as it prepares to finalize its China chip export control rule from October, said new license requirements could deal permanent damage to American chip industry sales in China.

“Over the long term, restrictions prohibiting the sale of our datacenter [graphics processing units] to China, if implemented, will result in a permanent loss of opportunities for the U.S. industry to compete and lead in one of the world's largest markets, and the impact on our future business and financial results is there,” Kress said during a webinar hosted by the company and Piper Sandler this week.

The Wall Street Journal on June 27 reported that the Bureau of Industry and Security, as it tweaks its October export control rules (see 2210070049), could issue new licensing requirements to make it more difficult for Nvidia and others to sell advanced chips to China. The tweaks could reportedly target Nvidia’s A800 chip, a product unveiled by the company in November that was designed to comply with BIS’ new export controls (see 2211080005). A BIS spokesperson declined to comment.

BIS has said it’s been considering ways to tighten the October rule to prevent companies from finding ways to circumvent the restrictions (see 2306200018). At least one lawmaker has urged the Commerce Department to tighten its controls to prevent Nvidia from providing downgraded versions of its products to China in an effort to “skirt the rule” (see 2305300074).

Kress said the company is aware that the new controls could “restrict exports of our A800 and our H800 products.” Although the move could limit sales to China, she expressed optimism that sales to other destinations would help compensate for the losses. “Given the strength of our demand for our products worldwide, we do not anticipate that such additional restrictions, if adopted, would have an immediate material impact on our financial results,” she said. She said the company has historically derived about 20% to 25% of its “data center revenue” from sales to China.