New US restrictions on the supply of AI chips will hit Nvidia very hard

The artificial intelligence boom has fueled Nvidia’s revenue surge, and while the cloud’s biggest players are US companies, the compute accelerator maker’s business is heavily dependent on customers outside the US. At least last year’s statistics say that Nvidia received 56% of its revenue outside the country.

Image source: NVIDIA

By the way, China accounts for about 17% of Nvidia’s revenue, and this allows it to consider the local market to be very important, even taking into account the ever-expanding sanctions. Literally from the first wave of export restrictions that affected computing accelerators, Nvidia began to adapt its existing accelerators to supplies to China under the conditions of sanctions.

It is not surprising that yesterday a publication on the pages of Nvidia’s corporate blog, which condemned the latest decision of the US authorities to introduce additional restrictions in the field of AI, even slightly anticipated the appearance of specialized news on the pages of world news agencies. It was important for Nvidia to convey its point of view not only to American officials, but also to customers.

Let’s remember that yesterday’s changes to US export control rules left just under two dozen countries that can freely receive Nvidia computing accelerators. In addition to the group of countries to which supplies are completely prohibited, there remains a rather impressive third group, whose representatives will have to obtain export licenses when trying to purchase large quantities of computing accelerators for their needs. Fortunately, the US authorities have left it to large American companies working with cloud computing power to supply computing accelerators to “neutral” countries under special conditions, but under the responsibility of these companies. However, for other market participants this will mean that the American giants will only increase their presence in the global market due to such restrictions.

The restrictions mentioned will come into force in 120 days, when the United States will already be led by Donald Trump. Most experts agree that under him there will be no radical deviation from the described export control rules; at most, he will decide to revise the lists of countries classified on the basis of policy friendliness towards the United States.