Nvidia hit by latest round of US chip sanction whack-a-mole

The US government has announced another raft of export controls on chips to China, which seems to be especially bad news for Nvidia.

The new restrictions were characterised by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) as an attempt to close some of the loopholes in the sanctions it introduced a year ago. While the announcement spoke generally about ‘advanced chips’, many of the headlines have focused on Nvidia, which is doing especially well out of the AI boom. Its shares were down 4% at time of writing.

“Today’s updated rules will increase effectiveness of our controls and further shut off pathways to evade our restrictions,” said Secretary of Commerce Gina Raimondo. “These controls maintain our clear focus on military applications and confront the threats to our national security posed by the PRC Government’s military-civil fusion strategy. As we implement these restrictions, we will keep working to protect our national security by restricting access to critical technologies, vigilantly enforcing our rules, while minimizing any unintended impact on trade flows.”

“The BIS will continue to demonstrate global leadership in the regulation of advanced computing and artificial intelligence technologies,” said Assistant Secretary of Commerce for Export Administration Thea Rozman Kendler. “These technologies inherently serve as force multipliers for humanitarian good and also for undermining global security and advancing repression.

“By imposing stringent license requirements, we ensure that those seeking to obtain powerful advanced chips and chip manufacturing equipment will not use these technologies to undermine U.S. national security. We will continue to hone these controls as technology evolves so that our technology is not used to threaten global peace and security.”

Well, not by other countries anyway. The US continues to denounce China’s ‘military-civil fusion strategy’ while at the same time referring to ‘our technology’. The chips in question are owned by non-military private companies such as Nvidia and Intel, not the US government, so what are government restrictions such as these if not part of a military-civil fusion strategy?

The attitude in the US government seems to be that if US companies suffer as a result of its desire to put the Chinese technological genie back in the bottle then that’s just tough. In fact these latest restrictions seem designed, in part, to confound efforts by companies like Nvidia to adapt to the last lot. So this game of whack-a-mole applies in multiple directions and it remains far from clear that the collateral damage is worth it.

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