TSM - Nvidia AMD dip as US mulls new AI chip curbs for China - report

2023-06-28 05:06:10 ET

Nvidia ( NASDAQ: NVDA ) and Advanced Micro Devices ( NASDAQ: AMD ) fell ~4% premarket on Wednesday following a report that the U.S. is considering new restrictions on exports of chips used for  training artificial intelligence (AI) models to China, The Wall Street Journal reported on Tuesday, citing people with knowledge of the matter.

Nvidia and AMD are the market leaders for chips important for developing generative AI models such as ChatGPT, which is  developed by Microsoft ( NASDAQ: MSFT )-backed OpenAI.

The U.S. Department of Commerce could stop shipments of certain chips made by Nvidia and other chip companies to customers in China as early as July, according to the report .

In September, Nvidia and AMD confirmed that the U.S. government had curbed the sale of some of their products to China and Russia. The Biden administration also intended to widen the restriction cast on exports of semiconductors to China with the aim of preventing China from getting chips which can be used for AI and related chipmaking tools.

Months later Nvdia CEO Jensen Huang had noted that the company would offer a new advanced chip known as A800 in China to meet export requirements. The company also made changes to its flagship H100 chip early this year to meet regulations, according to a report from Reuters.

The new restriction being discsussed by the Commerce Department would ban even the sale of the A800 chips without a special U.S. export license, the report added.

The U.S. is thinking of taking an action as soon as next month to expand the curbs to include these lower-powered semiconductors, WSJ reported.

The U.S. officials are also mulling whether to restrict the leasing of cloud services to Chinese AI companies, which have used such platforms in training their models, WSJ added.

Amazon.com ( AMZN ) and Microsoft are among the world's largest cloud service providers.

"Chinese AI firms may also be able to source dedicated AI chips from third party countries. So I think it will be hard for US to enforce the regulations," Bloomberg News reported citing Robert Lea, an analyst at Bloomberg Intelligence.

Following the release of ChatGPT, Chinese companies including Alibaba ( BABA ) ( OTCPK:BABAF ) SenseTime ( OTCPK:SNTMF ) and Baidu ( BIDU ) have launched their own generative AI services . According to a recent study, Chinese organizations have launched 79 LLMs in the past three years in an effort to boost their AI technology capabilities.

NVDA -4.72% to $399.00 premarket June 28

AMD -3.45% to $106.58

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