New US Regulations Impose Limits on Sale of Nvidia Chips Manufactured in China

As part of extensive updates to export restrictions aimed at limiting China’s access to advanced semiconductor technology, the United States is imposing limitations on the sale of chips developed by Nvidia Corp. specifically for the Chinese market.

The tighter controls target Nvidia’s A800 and H800 chips, which the American company created for export to the Asian country after the Biden administration imposed its original restrictions last October. Those restrictions, including the updated rules released Tuesday, are aimed at preventing China from accessing the latest technology for military use.

The new rules also require companies to notify the US government before selling chips that fall below the controlled threshold, as Bloomberg previously reported. High-end chips are best for powering AI models, a senior administration official said. But with a lot of money and a little jury work, a whole class of slightly inferior chips could also be used in artificial intelligence and supercomputers, posing a national security risk, the official said.

Shares of Nvidia Corp. were down about 3.6% in premarket trading at 9:11 a.m. New York time.

The official added that the United States wants to monitor that so-called gray zone, but declined to comment on specific parameters affected by the chips. The administration will review the companies’ filings within 25 days to determine whether the companies need a license to sell these chips to China, the official said.

“It’s hard to draw a bright line between military and commercial technology,” US Commerce Secretary Gina Raimondo told reporters before the rule was released. “There are often dual-use technologies – and the same technologies that fuel commercial exchange can, unfortunately, sometimes also enable our competitors to modernize their military, control their citizens, and entrench oppression.”

But the United States does not want to be more restrictive than necessary, Raimondo said, underscoring the Biden administration’s consistent message that Washington is not seeking to hurt China’s economy.

Chinese Foreign Ministry spokesman Mao Ning told a regular press conference in Beijing on Monday that his people opposed “the United States politicizing, instrumentalizing and weaponizing trade and technology issues.”

Washington conceded in one key area after a year of public comment on the original rule: The updated curbs allow the sale of widely advanced commercial chips to Chinese companies for use in consumer products such as smartphones, computers and electric vehicles, as Bloomberg previously reported. But the Biden administration is restricting the most advanced consumer chips — like those used in AI data centers — and mandating a notification process for select varieties that fall just short of the cutting edge.

The administration is also requiring companies to obtain a license to sell the chips to more than 40 countries, which Chinese companies could use as intermediaries to circumvent U.S. controls. It also adds two Chinese companies and their affiliates to the trade restriction list, which requires companies to obtain a US government license before supplying to those companies.

The U.S. is also expanding the range of restricted equipment, senior administration officials said, without specifying the specific equipment. Asked if the U.S. plans to restrict less advanced DUVs, which are mainly supplied by Dutch chip equipment leader ASML Holding NV, an administration official said Washington has been working with the Netherlands on that policy.

ASML’s CEO publicly opposed the initial US restrictions, and it took months for the US to get its key allies in Amsterdam and Tokyo on board.

The updated rules do not include restrictions on access to US or related cloud computing services, although the administration is issuing a request for comment to better understand the potential national security risks associated with this use and options to address them.