Technology company Nvidia was recently informed by the U.S. that it will now need a government license to export higher level artificial intelligence (AI) chips to China, Russia or Hong Kong.
Nvidia made a statement on Wednesday that prompted a stock selloff, showing the importance of the Chinese market to the AI chip market.
This move comes as the U.S. government seeks to limit Chinese technological development and may also be tied into tensions between the People’s Republic and Taiwan. The order covers two top computing chips that are believed necessary to advance Chinese AI capabilities.
Most of Nvidia’s chips and those of every other major provider are manufactured in Taiwan.
They are linked to image recognition, something security officials have raised red flags over concerning internal intelligence actions in the communist nation against ethnic and religious minorities.
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The company said its affected chips are the A100 and H100 designs, which are engineered to increase the speed of machine learning tasks. As its shares dropped, Nvidia officials said that the move could interfere with its newest H100 design’s development.
The Department of Commerce didn’t comment specifically on the situation, but acknowledged that the intention of their policies were to i keep the most advanced technology away from “the wrong hands.”