In a bid to further restrict Chinese companies from developing advanced artificial intelligence technology, the US government has begun to directly ban the sale of NVIDIA H20 artificial intelligence chips.
The US government's decision to ban the chip is seen as strange because the NVIDIA H20 chip was developed specifically for the Chinese market, where it follows specifications previously approved by the US government to allow NVIDIA to export the component to the country.
NVIDIA has confirmed this, and estimates that they will suffer a loss of about $5.5 billion because with this ban, they cannot sell their existing H20 chip inventory to any Chinese company immediately.
China is NVIDIA's most important market after the US. Last year, it was estimated that sales of graphics card components and AI chips in that market alone generated revenue of $17 billion, which is estimated to be around 13 percent of the company's total global sales.
This year, NVIDIA has received orders for NVIDIA H20 chips worth $18 billion from companies like Tencent, Alibaba, and ByteDance, all of which are looking to further enhance their AI capabilities with new technologies.
It is expected that these companies will now turn to Huawei, specifically the Huawei 920C chip, for their AI needs.
NVIDIA's revenue and profits are expected to decline sharply with this latest decision, and the Chinese tech company's reliance on its own domestically-made technology will continue to increase.