US licenses Nvidia to export chips to China, official says

The commerce department has started issuing licences to Nvidia to export its H20 chips to China, a US official told Reuters on Friday (Aug 8), removing a significant hurdle to the artificial intelligence (AI) bellwether’s access to a key market.

The US last month reversed an April ban on the sale of the H20 chip to China. The company had tailored the microprocessor specially to the Chinese market to comply with the Biden-era AI chip export controls.

The curbs will slice US$8 billion off sales from its July quarter, the chipmaker has warned.

Nvidia chief executive Jensen Huang met with Trump on Wednesday, two sources familiar with the matter told Reuters.

A spokesperson for Nvidia declined comment. A White House spokesman did not immediately respond to a request for comment.

The company said in July it was filing applications with the US government to resume sales to China of the H20 graphics processing unit, and had been assured it would get the licences soon.

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It is unclear how many licences may have been issued, which companies Nvidia is allowed to ship the H20s to, and the value of the shipments allowed.

Nvidia disclosed in April that it expected a US$5.5 billion charge related to the restrictions. In May, Nvidia said the actual first-quarter charge due to the H20 restrictions was US$1 billion less than expected because it was able to reuse some materials.

The Financial Times first reported Friday’s developments.

Nvidia said last month that its products have no “backdoors” that would allow remote access or control after China raised concerns over potential security risks in the H20 chip.

Big market

Exports of Nvidia’s other advanced AI chips, barring the H20, to China are still restricted.

Successive US administrations have curbed exports of advanced chips to China, looking to stymie Beijing’s AI and defence development.

While this has impacted US firms’ ability to fully address booming demand from China, one of the world’s largest semiconductor markets, it still remains an important revenue driver for American chipmakers.

Huang has said the company’s leadership position could slip without sales to China, where developers were being courted by Huawei Technologies with chips produced in China.

In May, Nvidia said the H20 had brought in US$4.6 billion in sales in the first quarter and that China accounted for 12.5 per cent of overall revenue during the period. REUTERS