(JW Insights) Nov 2 -- New U.S. export controls may compel artificial-intelligence giant Nvidia to cancel billions of dollars in next-year orders for its advanced chips to China, a move that could deprive Chinese tech companies of crucial AI resources, reported the Wall Street Journal on October 31.
The Santa Clara, Calif.-based company had already finished delivering orders of its advanced AI chips to China for this year, according to people familiar with the matter, and was pushing to deliver some 2024 orders in advance before the new rules were scheduled to come into effect in mid-November.
Then the U.S. government told Nvidia in a letter last week that the new export restrictions on the sale of high-end chips to countries including China were instead effective immediately.
China’s biggest AI and cloud-computing companies including Alibaba Group, TikTok owner ByteDance and Baidu had made large orders for delivery next year, the people said. Orders from major Chinese companies for 2024 exceeded $5 billion, one of the people said.
A spokesman for Nvidia said the company has been working to allocate its advanced AI computing systems, which use graphics chips affected by the rules, to customers in the U.S. and elsewhere and is pursuing additional supply. “These new export controls will not have a meaningful impact in the near term,” the spokesman said.
After the U.S. government imposed a less-stringent set of chip restrictions late last year, Chinese companies raced to order Nvidia’s A800 and H800, AI chips modified for the Chinese market to comply with the regulations. Under the tougher rules announced on October 17, however, Nvidia must cancel the orders unless it gets export licenses from the U.S. Commerce Department.
Nvidia stopped taking new orders from China for its advanced AI chips in the wake of the new restrictions, according to people familiar with the matter. The company planned to rush some deliveries of previously placed orders during the rule’s 30-day grace period, the people said.
Chinese companies have started sourcing homegrown chips, including Huawei Technologies’ Ascend 910 and Cambricon Technologies’ Siyuan 590.
Other Chinese companies such as Baidu and Alibaba have also developed their own AI chips and are counting on better algorithms and software to achieve higher performance with less advanced chips, The Wall Street Journal has reported.
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