Nvidia has found success in China selling automotive chips to the country’s electric car makers. But the US semiconductor giant has been banned from sending certain products to China. So far, electric vehicle manufacturers do not seem concerned.
Budrul Chukrout | Sopa Pictures | Light flare | Getty Images
BEIJING — U.S. restrictions on Nvidia chip sales to China won’t affect Chinese electric car makers because they use automotive systems that don’t include the sanctioned products.
Shares of chipmaker Nvidia plunged about 13% this week after the company disclosed new U.S. restrictions on its exports to China, affecting about $400 million in potential sales in the current quarter.
In China, the Nvidia Drive Orin chip has become a central part of electric car makers’ assisted driving technology. These semi-autonomous driving systems are a big selling point for companies in what has become a very competitive market in China. Some automakers also use Nvidia’s Xavier chip. Automotive is a relatively small but rapidly growing part of Nvidia’s business.
However, the new US restrictions target Nvidia’s A100 and H100 products – and sales of those chips are part of the company’s much larger data center business. The products are graphics processors that can be used for artificial intelligence.
“There should be no restrictions on Xavier and Orin, and Xpeng, Nio and others would continue to ship these chips,” said Bevin Jacob, partner at Shanghai-based investment and advisory firm Automobility.
Jacob, however, warned that there could be “intense scrutiny” in the future over US companies shipping chips related to artificial intelligence and autonomous driving to China.
Xpeng declined to comment. Nio, Li Auto, Huawei and Jidu – a new electric vehicle brand backed by Baidu and Geely – did not respond to requests for comment.
The new US rules are designed to reduce the risk of supporting the Chinese military, according to the US government, Nvidia said in its filing with the Securities and Exchange Commission on Wednesday. But it’s unclear what prompted this specific policy shift or what could drive future ones.
In another positive sign for the chipmaker, the United States will allow Nvidia to continue developing its H100 artificial intelligence chip in China, the company announced Thursday.
“The U.S. government has authorized the exports, re-exports, and domestic transfers necessary for further development of the H100 ICs by NVIDIA Corporation or the Company,” Nvidia said in a filing Thursday.
The company said second-quarter revenue from its automotive business was $220 million, up 45% from a year earlier.
“Our automotive revenue is sagging, and we expect this to be our next billion-dollar business,” Nvidia CEO Jensen Huang said on an earnings call in late August, according to a report. StreetAccount transcript.
WeRide, a self-driving technology start-up, said in a statement that “there is no immediate impact from the ban.”
“We believe industry supply and demand will work closely together to manage the ever-changing business environment to safeguard the technology’s continued development,” the company said in a statement to CNBC.
Pony.ai, another self-driving startup, said it was unaffected, as was automaker Geely.
— CNBC’s Kif Leswing contributed to this report.
. manufacturers chinese cars electric are home ban american chips nvidia