The US Imposes Restrictions on Nvidia and AMD AI Chips Export to Selected Middle Eastern Nations
In Brief
The US government's export restrictions often arise from national security concerns. The specific risks tied to shipments to Middle Eastern countries, however, remain uncertain.
Currently, the task of managing new licensing requirements for exports falls under the United States Commerce Department.
The US has ramped up its scrutiny over the export of cutting-edge AI chips made by Nvidia and AMD. Nvidia and Advanced Micro Devices (AMD) These newly implemented restrictions now extend beyond just China, now also covering multiple countries in the Middle East.
US export controls are predominantly driven by national security interests. A notable event from the previous year highlighted an increase in the US's clampdown on China’s technological advances. Nonetheless, the precise risks linked to exports heading to the Middle East continue to be unclear.
As of now, the Commerce Department of the US is tasked with overseeing newly set export licensing requirements.
In a recent regulatory filing, Nvidia mentioned that the restrictions affecting its A100 and H100 chips—critical for machine learning enhancement—are not expected to have a significant immediate effect on the company's financial performance.
Nvidia reassured stakeholders, stating, 'The new licensing criteria won't greatly affect our revenues. We are in dialogue with the US government to iron out these issues.'
According to Reuters AMD has also received communication regarding similar restrictions, affirming that this measure would not considerably impact its financial performance.
In September of the previous year, AMD revealed updated licensing protocols that led to a complete cessation of MI250 AI chip exports to China. Following suit, major players including Nvidia, AMD, and Intel announced plans to develop AI chips with diminished capabilities suitable for the Chinese market.
Understanding the Impact of Chip Restrictions in the Middle East
Nvidia has not provided details on which specific Middle Eastern countries are affected by the new restrictions.
The company earns approximately $13.5 billion from sales in the US, China, and Taiwan during the fiscal quarter ending July 30, while sales from other regions represent around 13.9% of the entire revenue portfolio. Nvidia has not revealed any revenue figures specifically from its operations in the Middle East.
'During the second quarter of fiscal year 2024, we were informed by the US government about an additional licensing requirement that applies to a group of A100 and H100 products meant for certain customers and other regions, including some countries in the Middle East,' Nvidia noted in a public statement.
The restrictions introduced last year came amid escalating tensions concerning Taiwan, a significant center for chip production for Nvidia and many leading chip manufacturers.
In October 2022, the Biden administration stepped up its measures by unveiling far-reaching export controls. One key provision aimed to deprive China of access to specific semiconductor chips crafted globally using US technology. This effectively broadened Washington's reach in its efforts to curb Beijing's progress in technology and military capabilities.
In response, Japan and the Netherlands implemented similar regulatory frameworks earlier this year.
The stringent controls imposed on American AI chips by companies such as Nvidia and AMD are expected to impede Chinese firms' ability to perform complex computing tasks economically, including advanced applications like image and speech recognition.
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