NVIDIA may lose $400M revenue with new export restrictions
The United States Securities and Exchange Commission has informed NVIDIA that it may not export its newest data-center GPUs to Russia and China without license.
NVIDIA will be required to obtain a license to export any A100 GPUs or systems such as DGX/HGX based on the company’s newest architectures. The newly imposed requirement will also apply to NVIDIA’s forthcoming H100 (Hopper) GPUs or products achieving similar performance.
The US Government believes that such license is required to limit the risk of such products being used by both countries for military use. It should be noted, however, that NVIDIA is currently not selling products to customers in Russia.
BREAKING (again): U.S. to restrict Nvidia from exporting its A100 and H100 server chips to China and Russia. Company says roughly $400 million of revenue at risk if customers there don't buy alternatives.
— Max A. Cherney (@chernandburn) August 31, 2022
This decision may impact the development of NVIDIA Hopper architecture because this new requirement will also require NVIDIA to transition ‘certain operations’ out of China, SEC notes.
NVIDIA may face approximately 400M USD lost revenue of potential sales of A100/H100 GPUs in China, but only if no alternative is given or SEC does not grant an export license on time.
On August 26, 2022, the U.S. government, or USG, informed NVIDIA Corporation, or the Company, that the USG has imposed a new license requirement, effective immediately, for any future export to China (including Hong Kong) and Russia of the Company’s A100 and forthcoming H100 integrated circuits. DGX or any other systems which incorporate A100 or H100 integrated circuits and the A100X are also covered by the new license requirement. The license requirement also includes any future NVIDIA integrated circuit achieving both peak performance and chip-to-chip I/O performance equal to or greater than thresholds that are roughly equivalent to the A100, as well as any system that includes those circuits. A license is required to export technology to support or develop covered products. The USG indicated that the new license requirement will address the risk that the covered products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China and Russia. The Company does not sell products to customers in Russia.
The new license requirement may impact the Company’s ability to complete its development of H100 in a timely manner or support existing customers of A100 and may require the Company to transition certain operations out of China. The Company is engaged with the USG and is seeking exemptions for the Company’s internal development and support activities.
In addition, the Company is engaging with customers in China and is seeking to satisfy their planned or future purchases of the Company’s Data Center products with products not subject to the new license requirement. To the extent that a customer requires products covered by the new license requirement, the Company may seek a license for the customer but has no assurance that the USG will grant any exemptions or licenses for any customer, or that the USG will act on them in a timely manner.
The Company’s outlook for its third fiscal quarter provided on August 24, 2022 included approximately $400 million in potential sales to China which may be subject to the new license requirement if customers do not want to purchase the Company’s alternative product offerings or if the USG does not grant licenses in a timely manner or denies licenses to significant customers.