US Govt softens stance on Nvidia selling AI GPUs to China, working with company to better define sanctions limits

Nvidia H100 NVL dual GPU PCIe solution
(Image credit: Nvidia)

Just over a week ago, U.S. Commerce Secretary Gina Raimondo issued a harsh rebuke to Nvidia for making swift alterations to its chips to allow selling its high-performance GPUs for AI and high-performance computing (HPC) applications to Chinese entities, threatening that that specific export cut lines could be adjusted “the very next day.” Raimondo's comments came during a fireside talk posted to YouTube, but the video has since been removed. This week, she softened her position and now says that her department is working with Nvidia and other American companies to better define the limitations, thus allowing them to continue selling their products to Chinese clients. The only condition is that Nvidia and others should not sell their most advanced products to China.

"Nvidia can, will, and should sell AI chips to China because most AI chips will be for commercial applications," Raimondo told Reuters. "What we cannot allow them to ship is the most sophisticated, highest-processing power AI chips, which would enable China to train their frontier models."

Nvidia, which leads AI and HPC GPU markets, has the okay to sell some of its chips to commercial companies in China. But the U.S. is putting its foot down on the top-of-the-line processors, such as the H100/H800, and products specially designed to meet the latest U.S. export regulations by making alterations that place them 'just below the cutline' defined in the current actions.  

Last week, Raimondo issued a stern warning to processor designers about attempting to bypass these regulations. She criticized the practice of creating products that marginally avoid existing restrictions, emphasizing that such actions would be met with immediate regulatory responses. This statement reflects the administration's determination to enforce strict control over technology that could pose a strategic threat. However, Raimondo's warning looked pre-emptive as Nvidia's rumored HGX H20 data center GPU performance fell significantly below U.S. export restrictions.

Losing access to the Chinese market would be a tremendous blow to Nvidia — it represents 20% to 25% of its revenue. It also cannot sell uncompetitive hardware to Chinese companies as plenty of homegrown AI processor suppliers are eager to substitute Nvidia on the market.

Nvidia's CEO, Jensen Huang, talked with Raimondo and clarified that the company would follow the rules. Huang assured clear adherence to the U.S. export regulations, demonstrating the company's willingness to cooperate and comply with the latest requirements.

Raimondo also touched on the broader context of U.S.-China relations. Raimondo noted positive developments, such as China's approval of a joint venture by MasterCard and the sanction of Broadcom's $69 billion acquisition of VMware. However, she expressed frustration over Chinese airlines' failure to resume Boeing airplane deliveries, an issue that President Biden raised with Chinese President Xi Jinping.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • ThomasKinsley
    Just over a week ago, U.S. Commerce Secretary Gina Raimondo issued a harsh rebuke to Nvidia for making swift alterations to its chips to allow selling its high-performance GPUs for AI and high-performance computing (HPC) applications to Chinese entities, threatening that that specific export cut lines could be adjusted “the very next day.”

    This is absolutely uncalled for. A government official blasting tech CEOs for selling legal products in accordance with US sanctions is egregious. Yet this reaction reveals the US's policy for the tech sector for the next year: the sanctions will become stricter. This is why Nvidia's new products are met with sharp rebuke. It runs in opposition to the planned sanctions that are not yet public.
  • abufrejoval
    I always wondered how the US government justifies the restrictions on high-tech exports...

    The fact that China might become not just be a contender but a technology lead alone is not a permissible reason for these measures.
  • Lucky_SLS
    If only the US also put a price cap on the products based on the performance...
  • JTWrenn
    The truth is the government made a bad regulation and Nvidia followed it to the letter and it made someone look bad. So she came out and blasted them to cover her behind rather than admitting their regulations were not layed out right and saying...well exactly what she just said. This sounds like a misunderstanding of how tech works from government regulators. They saw existing products and that that if they drew a line between two products they could cap the capabilities at tier 2 rather than Nvidia making a 2.5 that maxes out the sanctions level.
  • ex_bubblehead
    A reminder that politics of any kind are to be kept out of these forums. Failure to comply will result in closure of the thread and possible sanctions on the violator/s.
  • watzupken
    I think they had to backtrack because this is not a 1 way street. US have a very heavy dependency on the likes of Nvidia for hardware. So while they can threaten Nvidia, it can backfire on them if they push too hard and becomes unbearable. Corporates are out to make money, so someone wants to shut them out of any very lucrative market completely, it won't go well.
  • dk382
    The previous stance of "if you try to get in just under the line we draw for you, we'll move the line" was ridiculous. What's the point of drawing a line if you're just going to move it every time someone gets close to it? Nvidia and government officials working together to determine what can and can't be sold makes the most sense and is how things should have been handled from the start.

    That said, I still don't understand the point. It's not like higher-end AI chips enable things that lower-end chips don't. Everyone is running these chips in parallel to create exascale supercomputers, and you'll be able to do this with any datacenter accelerator Nvidia sells. The only thing this performance restriction does is make it so China will have to buy 20,000 lower-end GPUs instead of 10,000 H100s to build their supercomputers. Maybe US officials are just now realizing how futile their trade restrictions are.
  • gg83
    The power of lobbying dollars I'm sure. When a company makes 70% profit they need to be looked into. Unless they make essential military equipment, those companies do what they want.