Nvidia higher as CEO is working with U.S. to meet China AI-export rules

Nvidia  (NVDA) – Get Free Report shares moved higher in early Wednesday trading after CEO Jensen Huang said the chipmaker was working with U.S. officials and market participants to produce AI-related chips that meet new China-export restrictions. 

Speaking in Singapore during a conference on AI technologies, Huang said it was difficult to predict the revenue impact of the new U.S. restrictions on tech exports to China. 

But he said Nvidia would nonetheless seek both advice from customers and counsel from the U.S. government to tailor its semiconductors for sale in the $7 billion market. 

Reuters reported late last month that Nvidia had told customers it was delaying the launch of the H20 chip until early next year. That’s one of three chips it’s developing in the wake of enhanced restrictions on China exports put in place by the Biden administration in October.

The new restrictions, which expand upon new export rules put in place last year, are designed to limit China’s access to “advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to (Chinese) military applications,” according to U.S. Trade Secretary Gina Raimondo.

“Nvidia has been working very closely with the U.S. government to create products that comply with its regulations,” Huang said. “Our plan now is to continue to work with the government to come up with a new set of products that comply with the new regulations that have certain limits.”

Nvidia shares were marked 1.17% higher in premarket trading to indicate an opening bell price of $471.10 each.

Raimondo: AI ‘threat from China growing’

Earlier this week, Secretary Raimondo told CNBC that “the threat from China is large and growing” with respect to Beijing’s ability to acquire AI technologies that could find their way into the military. 

Related: Nvidia has a massive problem following U.S. official’s comments

Speaking at the Reagan National Defense Forum in Simi Valley, Calif., Raimondo warned U.S. companies looking to skirt the new regulations that “if you redesign a chip around a particular cut line that enables [China] to do AI, I’m going to control it the very next day.”

Nvidia has warned that China sales will likely slow “significantly” over the current quarter as a result of the new rules, a view that clouded the group’s better-than-expected third quarter earnings on Nov. 22.

Chief Financial Officer Colette Kress noted that China sales, which comprise around 20% to 25% of total group revenue, would likely slow over the current quarter as a result of new export restrictions put in place by the U.S. government, aimed at limiting Beijing’s access to AI and other high-tech gear.

She said, however, that the decline would be largely offset by gains in other regions where demand for the chips that power AI-related technologies remains firm.

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