New licence requirement may force NVIDIA to ‘transition’ operations out of China
In a filing to the US Securities and Exchange Commission (‘SEC’), software corporation NVIDIA has warned that its sales will be impacted by new licensing requirements imposed by the US Department of Commerce.
It said in the filing, ‘On August 26, 2022, the U.S. government (USG)…informed NVIDIA Corporation, or the Company, that the USG has imposed a new license requirement, effective immediately, for any future export to China (including Hong Kong) and Russia of the Company’s A100 and forthcoming H100 integrated circuits. DGX or any other systems which incorporate A100 or H100 integrated circuits and the A100X are also covered by the new license requirement.
‘The license requirement also includes any future NVIDIA integrated circuit achieving both peak performance and chip-to-chip I/O performance equal to or greater than thresholds that are roughly equivalent to the A100, as well as any system that includes those circuits. A license is required to export technology to support or develop covered products. The USG indicated that the new license requirement will address the risk that the covered products may be used in, or diverted to, a “military end use” or “military end user” in China and Russia. The Company does not sell products to customers in Russia.’
It said that the requirement may impact its ability ‘to complete its development of H100 in a timely manner or support existing customers of A100 and may require the Company to transition certain operations out of China.’ But, it said, it is currently ‘engaged with the USG and is seeking exemptions for the Company’s internal development and support activities.’
It also said in the filing that, ‘to the extent that a customer requires products covered by the new license requirement, the Company may seek a license for the customer but has no assurance that the USG will grant any exemptions or licenses for any customer, or that the USG will act on them in a timely manner,’ and added that a recent sales forecast ‘included approximately $400 million in potential sales to China which may be subject to the new license requirement if customers do not want to purchase the Company’s alternative product offerings or if the USG does not grant licenses in a timely manner or denies licenses to significant customers.’
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001045810/000104581022000146/nvda-20220826.htm
For a deeper look at the US government’s approach to the licensing of semiconductors, see US targets semiconductor design software in effort to curtail China’s influence, written by Wiggin and Dana partner Daniel Goren, in the forthcoming issue of WorldECR.
