The US wants to prevent the use of state-of-the-art computing accelerators for military purposes. It can hurt Nvidia the most, which only has this quarter at risk contracts to China for $400 million.
Manufacturers of processors and graphics have blocked the sale of their hardware in Russia after the start of the military invasion of Ukraine. In addition, now, it seems, another export ban is coming, for a change to China. In this case, it is a longer-term tension. The US has banned the export of the most powerful computing GPUs to China and Russia, considering that this hardware is used to build supercomputers that can be used, among other things, to simulate nuclear weapons.
These new US sanctions on powerful computing GPUs were imposed on August 26. News about them started coming this week in a statement from the companies themselves. Not all GPUs are subject to sanctions, but those that exceed a certain level of total performance in TFLOPS and throughput of the interfaces they are connected to (which presumably means the CPU and other accelerators in multi-GPU configurations).
Sales, and even just the delivery of samples of these GPUs to China (including Hong Kong) and Russia are now subject to the need to obtain a special license. This means that each individual van must have an explicit permit, but it is probably assumed that, except in some exceptional cases, such a license will usually be refused. It is also necessary to have a license for servers or larger units in which the GPU in question would be contained, but also for other technologies and “support” and development for these GPUs. According to the US government, the reason for the sanctions is the fear that these products may be used for military purposes in China and Russia.
This restriction apparently affects the latest computing accelerators of all GPU manufacturers – according to Nvidia’s statement, these sanctions prohibit the sale of accelerators A100 with 7nm Ampere architecture, their improved version A100X and logically also the new generation H100 announced this year with Hopper architecture. However, according to Nvidia’s statement, Nvidia may be forced to relocate some activities (probably development centers) in China abroad, and under certain conditions it could probably delay the completion of the H100 development (here, apparently, it is mainly the development of the software side, not the hardware itself).
Similarly, Intel’s Ponte Vecchio computing GPU should also be banned, and AMD has directly confirmed that its Instinct M250X accelerators (and probably others from this generation) are also prohibited from being exported to Russia and China. According to AMD, the older version of the MI100 is still under the limits according to current information and should perhaps be allowed to go to China. Logically, the upcoming new generations of GPUs with higher performance should also be banned when they come out.
Nvidia’s sales may be significantly affected
Economically (and practically for Chinese companies and institutions), stopping the export of GPUs will probably have the biggest effects in the case of Nvidia products, whose volume directed to these markets was by far the largest. Indeed, Nvidia announced that these sanctions could deprive it of about $400 million in sales in the data center division even now in the third quarter – specifically, it states that this is roughly the volume of sales to China that it already includes in its expected sales for the third quarter, which 5.9 billion (while its forecast already includes a significant drop due to a drop in demand for gaming graphics; so now the drop in sales could be even deeper if those Chinese sales disappear).
Tip: Nvidia’s financial results: the worst is yet to come, graphics sales will drop by three quarters of a billion in Q3
This would be damages for just one quarter, so Nvidia could lose even more money in the long run. However, the impact may actually be somewhat less if the affected customers can be persuaded to replace their orders with other, slightly weaker or older GPUs that are not subject to the sanctions – or manage to obtain a license. So whether the damage to Nvidia will really be this significant is not certain.
In contrast, AMD says it doesn’t expect any significant drop in sales as a result of not being able to fulfill orders for its latest computing GPUs heading to China. Apparently, therefore, it did not have such significant contracts at least for the near future, although in the longer term it can also harm it.
Sources: US SEC, Tom’s Hardware, Reuters
The US ticks off the export of the most powerful GPUs to Russia and China, Nvidia may lose a lot of sales
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