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.
