Nvidia and AMD have recently encountered new restrictions on the sales of their AI chips in certain Middle Eastern countries, according to reports from Reuters. This expands the limitations imposed on these chips beyond China and Russia. The new licensing requirement specifically affects a subset of Nvidia’s high-end chips.
The Biden administration, however, has stated that it has not “blocked” chip sales to the Middle East, as reported by Reuters. The Commerce Department declined to comment on whether they have imposed new requirements on specific US companies. Neither the Commerce Department, Nvidia, nor AMD have responded to requests for comment.
Nvidia disclosed the new licensing requirement in a regulatory filing. The company mentioned that there are now licensing requirements for exporting a wide range of products, including networking products, intended for certain end users and certain end uses in China. Additionally, during the second quarter of fiscal year 2024, the US government informed Nvidia about an additional licensing requirement for a subset of A100 and H100 products sold to specific customers and regions, including some countries in the Middle East. Nvidia stated that it does not expect these constraints to have an immediate material impact.
Similarly, AMD received a letter detailing similar restrictions, although no specific countries were mentioned in the report. Nvidia’s regulatory filing did not provide an explanation for these restrictions.
The Biden administration has previously imposed export restrictions on Nvidia’s A100 and H100 chips due to concerns about their potential use in military applications in China. These recent developments highlight the risk that changes in export controls may harm Nvidia’s results and competitive position and potentially exclude them from parts of the Chinese market.
Nvidia’s H100 chips are highly valuable and can even be used as collateral for loans by startups. Industry sources suggest that obtaining H100s may become extremely difficult, with lead times for new orders estimated at roughly six months. This scarcity poses significant challenges for the AI industry and may disrupt operations for the foreseeable future.