US bans Nvidia from selling its AI chips to Middle East

August 31, 2023
Middle East China AI

The US government has blocked Nvidia from selling its A100 and H100 AI chips to the Middle East in response to its growing concerns over China’s AI ambitions.

Nvidia is already restricted from selling its top-end chips to China and Russia directly. The latest export licensing restrictions come as the US authorities are concerned that some countries in the Middle East might re-export the chips they buy to China.

Nvidia revealed the restrictions in a regulatory filing but said that they would not have an “immediate material impact” on its business.

In a separate statement, Nvidia said the licensing requirement “doesn’t affect a meaningful portion of our revenue. We are working with the U.S. government to address this matter.”

While it sounds like the company is trying to brush this off as a non-issue, it certainly isn’t ignoring the Chinese market. In an effort to appease US authorities, it has been selling its reduced functionality A800 and H800 chips to China.

When the initial export restriction was placed on Nvidia in 2022, US officials explained that it “will address the risk that products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China.”

Other chip manufacturers like AMD have seen similar export restrictions placed on them resulting in black market trade in China.

US concerned over China Middle East collaborations

Gulf countries like the UAE and Saudi Arabia have been spending billions of dollars on Nvidia hardware to build their own AI capabilities.

The concern is that a lot of the money flowing into the UAE and Saudi Arabia for these projects is coming from China. In late 2022 Saudi Arabia signed a strategic partnership plan with China to work closely on the development of AI technologies. Countries like the UAE are following suit.

One senior US trade lawyer said the US was concerned “not just with exports of chips to China, but the ability of Chinese companies to train their AI software outside of China and bring it back to China.”

That’s probably a realistic scenario. A spokesperson for the UAE said his country has a “legal export control framework and is continuously monitoring the export of dual-use products”. That may address hardware but doesn’t clearly address IP being repatriated to China.

What complicates the issue further is that a lot of Nvidia’s high-end chips are manufactured in Taiwan, which Beijing views as part of its territory. China must feel particularly aggrieved at not being able to access products that are manufactured in what it views as its own country.

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Eugene van der Watt

Eugene comes from an electronic engineering background and loves all things tech. When he takes a break from consuming AI news you'll find him at the snooker table.

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