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- 🤖 ‘New AI Rules Might Force NVIDIA to Cancel $5B in Orders'
🤖 ‘New AI Rules Might Force NVIDIA to Cancel $5B in Orders'
#NP 121
Neon Pulse Team
November 10, 2023
Good morning and welcome to the latest edition of neonpulse!
Today, we’re talking about new regulations imposed by the US government. Because they might force Nvidia to cancel $5 billion (!) in orders. Let’s dive in!
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‘New AI Rules Might Force NVIDIA to Cancel $5B in Orders’
Nvidia, one of AI’s key players, might be in trouble. New U.S. export controls may result in the cancellation of billions of dollars in orders for their chips destined for China. The move could have far-reaching consequences for Chinese tech companies reliant on these crucial AI resources.
According to sources, Nvidia had completed its deliveries of AI chips to China for this year and was working to expedite some 2024 orders before mid-November, when the new rules were slated to take effect. However, the U.S. government's recent notification to Nvidia stated that the export restrictions were effective immediately.
China's major AI and cloud-computing companies, like Alibaba Group and ByteDance, had placed massive orders for delivery in the coming year. These orders from major Chinese companies for 2024 exceeded a staggering $5 billion.
A spokesperson for Nvidia assured that the company is actively working to allocate its advanced AI computing systems, which use graphics chips impacted by the new rules, to customers in the U.S. and elsewhere. They emphasized that these export controls are not expected to have a substantial immediate impact.
Earlier this year, Colette Kress, Nvidia's Chief Financial Officer, expressed concerns that long-term restrictions on AI chip sales to China could lead to lasting missed opportunities for the U.S. chip industry.
These measures are part of a broader initiative by the Biden administration to limit China's access to advanced technology, including high-performance chips and AI tools, which the U.S. believes could be used for military and cyberwarfare purposes.
In light of last year's less-stringent chip restrictions imposed by the U.S. government, Chinese companies rushed to order Nvidia's A800 and H800, AI chips modified for the Chinese market. However, under the stricter rules announced on October 17, Nvidia must cancel these orders unless granted export licenses from the U.S. Commerce Department.
As a result of the new restrictions, Nvidia has ceased accepting new orders from China for their advanced AI chips. The company had initially planned to expedite deliveries of previously placed orders during the rule's 30-day grace period. The immediate implementation of the restrictions meant that deliveries were no longer possible.
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