U.S. Restricts Sales of Sophisticated Chips to China and Russia

The Biden administration has imposed new restrictions on sales of some sophisticated computer chips to China and Russia, the U.S. government’s latest attempt to use semiconductors as a tool to hobble rivals’ advances in fields such as high-performance computing and artificial intelligence.

The new limits affect high-end models of chips known as graphics processing units, or GPUs, which are sold by the Silicon Valley companies Nvidia and Advanced Micro Devices. Such products were originally developed to render images in video games but in the past decade were widely deployed in the largest supercomputers used by scientists and by internet companies for applications such as recognizing speech and objects in photographs.

Supercomputers are used in applications that include weapons development and intelligence gathering, and some large systems in China have been linked to surveillance of the country’s Muslim minorities. A.I. technology is also increasingly being used for purposes such as identifying faces in video images.

The restrictions are part of a cold war between China and the United States for primacy in advanced technologies. The Biden administration, building on limits begun under former President Donald J. Trump, has adopted measures aimed at restricting access by companies such as China’s Huawei to advanced chips and foreign semiconductor manufacturing. China has designed many chips on its own, but generally relies on factories in Taiwan to manufacture the most advanced models.

In statements on Wednesday, Nvidia and AMD acknowledged the new restrictions.

Nvidia, by far the largest GPU maker, said the federal government would now require it to seek export licenses to sell two high-end chips used with server systems in data centers. The government said the new requirement would address the risk that those products might be used in, or diverted to, a military use in China and Russia, according to the company.

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Nvidia has many customers in China, but does not currently sell to Russia. It said the new measures affected a business that generated about $400 million in revenue in its most recent fiscal quarter.

AMD said the measures appeared to affect sales of one of its high-end GPUs to China and Russia. It said it did not believe the restrictions would have a material effect on its business.

A spokesman for the Commerce Department said it was conducting a review of policies related to China and might adopt new measures to keep advanced technologies out of the wrong hands.

Without commenting on the chip restrictions specifically, the spokesman said possible future steps include “preventing China’s acquisition and use of U.S. technology in the context of its military-civil fusion program to fuel its military modernization efforts, conduct human rights abuses and enable other malign activities.”

In the last few years, the Commerce Department’s Bureau of Industry and Security has tightened restrictions on supplying certain U.S. technologies to China, arguing that the goods were being sold through civilian supply chains but ultimately went toward military uses, like weapons, aircraft and surveillance technology. Companies can request a license to sell restricted items to specific customers, but most of those applications are denied.

Nvidia’s and AMD’s statements indicated that they did not expect licenses to be granted in most cases. AMD said it expected the measures to “prevent” the sale of a product called the MI250 to China and Russia.

Nvidia said the measures affected an existing product, the A100, as well as a product that is expected to be available later this year, the H100. It added that the restrictions might hurt its ability to complete development of the H100 in a timely manner or support existing customers of the A100, and might require the company to transition certain operations out of China.

The measures come at a tough time for Nvidia. Demand for GPUs used in video game play and in cryptocurrency mining has dropped sharply, and in early August, Nvidia posted quarterly revenue that was well below what it had forecast in May.

Nvidia’s stock fell more than 6 percent late Wednesday after it confirmed the new government restrictions, which had been the subject of earlier articles in Chinese news outlets.

Paul Mozur contributed reporting.

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