Nvidia: Long term chip export controls against China will cause the US industry to lose competitive opportunities
AI chip giant Nvidia reiterated that if the US government restricts Nvidia from selling GPUs to China, it will cause the US industry to lose its leading edge in one of the world's largest markets.
On August 23rd local time, during a conference call after the release of the second quarter financial report, Nvidia CFO Colette Kress stated that although Washington has implemented export restrictions against China, the majority of AI chip demand still comes from China, and Chinese buyers account for 20% to 25% of its total data center product revenue.
Kress believes that given the strong global demand for Nvidia products, if the US government imposes additional export restrictions on data center GPUs, it is not expected to have an immediate significant impact on Nvidia's revenue performance. However, it is also pointed out that "in the long run, if relevant policies and restrictions are introduced to sell our data center GPUs to China, it will lead to the loss of competition and leadership opportunities for the US industry in one of the world's largest markets."
On August 23rd local time, Nvidia released its financial report for the second quarter of the 2024 fiscal year as of July 30th, achieving revenue of $13.51 billion, a year-on-year increase of 101%, higher than the expected $11.19 billion; Net profit of 6.19 billion US dollars, an increase of 843% year-on-year; Non US GAAP diluted earnings per share were $2.70, a year-on-year increase of 429%, higher than the expected $2.08. Due to significantly exceeding expectations in performance, Nvidia's stock price rose by over 10% after trading.
Nvidia's statement this time is consistent with what CEO Huang Renxun said three months ago.
On May 24th, Huang Renxun stated in an interview with the Financial Times that "the chip war against China will cause 'huge damage' to US technology."
In Huang Renxun's view, China accounts for about one-third of the US technology industry market, and as a source and end market for product components, it is irreplaceable. While the United States is implementing export controls on China, Chinese companies are starting to manufacture their own chips to compete with Nvidia's gaming, graphics, and artificial intelligence processors.
Therefore, Huang Renxun warned US lawmakers that they must "carefully consider" further restrictions on China.
Last October, the Industrial and Security Administration of the US Department of Commerce announced new export controls on advanced computing and semiconductor manufacturing items exported to China, prohibiting semiconductor equipment manufacturers from selling certain devices to China and exporting chips for artificial intelligence applications. This is another escalation of US sanctions on China's semiconductor industry since 2018.
In response to this, Chinese Foreign Ministry spokesperson Mao Ning stated at a regular press conference on October 8, 2022 that the US has abused export control measures to maliciously block and suppress Chinese enterprises in order to maintain its technological hegemony. This practice goes against the principle of fair competition and violates international economic and trade rules. It not only damages the legitimate rights and interests of Chinese enterprises, but also affects the interests of American enterprises. This approach hinders international scientific and technological exchanges and economic and trade cooperation, and will have an impact on the stability of global industrial and supply chains and the recovery of the world economy. The US politicizes, instrumentalizes, and weaponizes technology and economic and trade issues, which cannot hinder China's development. It will only blockade itself and backfire on itself.
The implementation of chip export controls on China has faced opposition from industry associations in the United States and multiple chip giants.
On July 17th, the Semiconductor Industry Association of America issued a statement on its official website regarding possible additional restrictions imposed by the US government on semiconductors.
The statement stated that the White House's repeated adoption of overly broad, vague, and sometimes unilateral restrictive measures may weaken the competitiveness of the US semiconductor industry, disrupt the supply chain, and trigger significant market uncertainty. The SIA urges the White House to engage more extensively with industry and experts and refrain from implementing further restrictive measures until the impact of current and potential measures is evaluated.
A few hours after SIA issued its statement, Matthew Miller, spokesman of the US State Department, said at the press conference that senior officials of the US government, such as US Secretary of State Anthony Antony Blinken, met with executives of US chip companies on the same day, and said that Blinken "directly listened to how these companies view supply chain issues and their views on conducting business in China".
According to multiple foreign media reports, the CEOs of the three major chip giants in the United States - Intel CEO Pat Kissinger, NVIDIA CEO Huang Renxun, and Qualcomm President and CEO Cristiano Ammon - attended a meeting in Washington on the 17th. They told Biden administration officials that the US government should study the impact of tightening export restrictions on China and suspend relevant measures until new restrictions are implemented. Three CEOs have warned that implementing relevant export control measures may harm the United States' leadership position in the industry.
On July 18th, at a regular press conference of the Ministry of Foreign Affairs, foreign media reporters asked. According to sources, the Biden administration may introduce a series of restrictions on China's cutting-edge technology investment at the end of August, and stated that these policies may prohibit new investment in fields such as semiconductors, quantum computing, and artificial intelligence, but do not involve the biotechnology and energy industries. May I ask if the Chinese side has any comments on this?
Mao Ning stated that China has always opposed the politicization and weaponization of economic, trade and technological issues by the United States. We believe that the practice of artificially setting obstacles to normal technological cooperation and economic and trade exchanges violates the principles of a market economy, disrupts global supply chain stability, and is not in the interest of either party. "We hope that the US side will implement President Biden's promise of no intention of decoupling from China, obstructing China's economic development, or containment of China, and create a favorable environment for Sino US economic and trade cooperation."
