US accelerates Chinese chip export ban as report warns of $5bn sales hit

Imports and Exports | | MIC Customs Solutions |

Nvidia has reported the US government has demanded an immediate end of shipments of computer chips to China ahead of an expected deadline.

The US has accelerated its timeline for the imposition of new export controls on shipments of advanced computer chips to China, as a new report suggests that the restrictions could cost the country's biggest manufacturer billions of dollars in lost sales.

Previously, new rules were expected to come into force 30 days from 17th October. However, a filing to the Securities and Exchange Commission by chipmaker Nvidia last week revealed that it had been instructed by the US government to suspend shipments of five chips with immediate effect.

Those covered by the new extended ban are the A100, A800, H100, H800 and L40S models. Restrictions on the A800 may be especially notable, as this was a product designed by Nvidia specifically for export to China in order to avoid previously-announced export controls on hi-tech chips.

While Nvidia's filing stated that the accelerated timings "will not have a meaningful impact in the near term" as it has already fulfilled export orders of chips for this year, a report by the Wall Street Journal has suggested the rules could leave up to $5 billion worth of orders from China in jeopardy. 

Under the latest round of restrictions on chip exports, announced on 17th October, a wider range of technologies will be subject to export controls and licensing requirements in order to close loopholes in the previous rules. The updates also expand the measures to other countries, including Iran and Russia.

Earlier versions of the rules imposed a two-part test to determine which products were subject to restrictions, looking at both a chip’s computing performance and its ability to communicate with other chips. This allowed the likes of Nvidia to design specific chips for the Chinese market such as the A800 that would fall under the given thresholds. However, the updated rules seek to crack down on these workarounds.

US Commerce Department secretary Gina Raimondo stated that the rules are likely to continue being updated on at least an annual basis. She added that the aim is to limit China's access to "advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to military applications".