Nvidia's AI Chip Exports Caught In Crossfire As Biden's China Policy Focuses On Tech

The Biden administration has pressed the pause button on Nvidia Corp. NVDA’s microchip sales to the Middle East amid concerns about potential re-exports to China.

The bold geopolitical move aims to curb Beijing’s artificial intelligence ambitions, as the Telegraph’s James Titcomb reports Wednesday.

The Biden administration is shifting its focus toward national security in the tech sphere. The microchips in question, including the pivotal H100 and A100 chips, play a pivotal role in training advanced AI systems. Notably, these chips are integral to software like ChatGPT, illustrating their global significance.

Biden Draws The Red Line

By limiting the sale of these microchips to the Middle East, the U.S. aims to curtail China’s access to advanced AI resources while also severing potential links between Middle East organizations and Chinese AI companies.

While sales of these chips were previously constrained in China and Russia, the latest move marks an audacious expansion of U.S. trade controls beyond the borders of those two countries.

Saudi Arabia and the United Arab Emirates have been actively buying Nvidia’s microchips, according to the Telegraph report. Both nations have also engaged with China to deepen their AI links, potentially igniting concerns about the indirect transfer of advanced AI technology.

A representative from Nvidia told The Telegraph: “The licensing requirement mentioned in our 10Q doesn’t have a significant impact on our revenue, and we’re collaborating with the US government to address the matter.” Meanwhile, a spokesperson from the UAE stated that the nation maintains a “legal framework for export control and maintains continuous vigilance over the export of products with dual-use potential.”

NVDA Price Action: On Wednesday, Nvidia shares experienced a 0.98% upswing, marking the third consecutive day of gains.

The stock is trading 2% below its record peak reached Aug. 24. This surge follows the impressive second-quarter earnings report by the chipmaker giant.

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy of Nvidia.