The U.S. Department of Commerce blocked an American chipmaker from sending key AI chips that tech giants in China had ordered from them.
On Tuesday, the Wall Street Journal reported that the Commerce Department blocked Nvidia from sending the artificial intelligence chips, which were estimated to be worth billions.
More than $5 billion worth of the chips were set to be delivered by Nvidia to fulfill various orders from China. The Biden administration, though, is blocking those orders due to new restrictions on computer chips, the Journal reported.
Nvidia was apparently trying to send the chips out before those new restrictions went into effect. But, the company recently was sent a letter from the Biden administration saying that the new sanctions would go into effect immediately, rather than one month following the announcement of them, which happened on October 17 – as was originally scheduled.
In its report, the Journal cited individuals who were knowledgeable about the situation.
The orders for the AI chips were for next year, and come from companies such as ByteDance – the Chinese parent company of the popular social media app TikTok – as well as other tech giants in China such as Baidu and Alibaba, the Journal reported.
According to the new rules that are in place, before companies can send certain chips to Chinese companies, they must receive approval from the Department of Commerce. These new controls on exports close some loopholes that existed in the current restrictions, while also reducing the export of any equipment that’s necessary to produce advanced semiconductor chips.
The Commerce Department published the full details of the new rule on October 17.
As a result of the newly-implemented limitations, Nvidia has stopped accepting any orders from Chinese companies for advanced artificial intelligence chips, sources told the Journal.
A spokesperson for the company told the media outlet:
“These new export controls will not have a meaningful impact in the near term.”
On the day that the new restrictions were announced in October, Nvidia said that the sales that will be blocked are two high-end AI chips that it specifically created for the market in China. In addition, a top-notch gaming chip that it has produced also will be blocked.
Nvidia made a filing about the sales, its H800 and A800 chips, which were created for the Chinese market with previous export rules in mind. Last month, they said that now those chips are set to be blocked under the new rules.
The company wouldn’t specifically comment about the situation, only referring to the filing it made.
Other companies are also going to be impacted by these new rules. Advanced Micro Devices and Intel were both working to build new chips to compete with those created by Nvidia, but they are set to be blocked, too.
For instance, SemiAnalysis’ chief analyst Dylan Patel said that the Gaudi 2 chip that Intel started to sell to China back in July will now be banned according to the new rules.