Nvidia in blast radius as Uncle Sam looks to cut off China's Huawei for good
GeForced into a cold war
The Biden Administration is reportedly weighing new trade restrictions that would end Trump-era exemptions allowing the sale of US-made chips, including those made by Nvidia, to Chinese telecommunications equipment giant Huawei.
According to a draft amendment to US Commerce Department's licensing rules obtained by Reuters the agency is considering measures to restrict the export of controlled goods to Huawei.
While the telecom giant was formally placed on the US entities list in 2019 — in part over concerns that the Chinese government could force Huawei to install backdoors into its networking equipment — American companies were allowed to continue doing business with the company under special licenses that allowed the sale of equipment below 5G.
The unfinished plan specifically calls out Nvidia's plans to sell goods to Huawei as being put at risk. "The proposed 2023 amendment of (the Commerce Department's) licensing will likely have a high economic impact on Nvidia," the draft reportedly says.
For it's part, the Commerce Department said the draft was just that, and that the department was still weighing its options with regard to China and Huawei.
This wouldn't be the first time that the Biden Administration's trade restrictions have caused trouble for Nvidia's operations in China. Last summer the US Commerce Department warned Nvidia and AMD that it could no longer sell chips used for AI, including the company's respective A100 and MI250 GPUs, without special licenses.
Nvidia has gone to great effort to continue selling its goods in China. After the Commerce Department formalized its restrictions on high-end GPU and AI accelerators, Nvidia launched a nerfed A100 for the Chinese market called the A800.
Nvidia declined to comment on its relationship with Huawei, its plans for China, or whether US Commerce Department rules could adversely impact its business operations in the region.
What does Huawei want with Nvidia?
However, it remains unclear what Huawei wants with Nvidia's hardware in the first place. After years of US sanctions, the company has sold off many of the likely candidates, including its server division, which it parted ways with in late 2021. The company still lists several AI/ML-centric services on its website, but they're all using hardware that's at least four years old.
It's possible that Huawei may be trying to reinvigorate its Ascend Compute platform to capitalize on the surge in interest around generative AI models like ChatGPT or Stable Diffusion. As we reported last month, Chinese tech companies are scrambling to field generative models of their own.
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It's worth remembering that while Nvidia is perhaps best known for its gaming, workstation, and datacenter GPUs, the company is also a major supplier of high-end networking equipment.
Since acquiring Mellanox in 2019 for $6.9 billion and later Cumulous for an undisclosed sum, the company has inherited a wealth of networking hardware ranging from high-end 400Gbps Ethernet and InfiniBand network switches to network cards like the ConnectX smartNIC and BlueField DPUs. This equipment has applications in a number of high-end network applications.
Given Huawei's ongoing focus on the telecom market it's not hard to imagine the company adding Nvidia's BlueField DPUs to its offerings to offload various network or security related functions.
The Register reached out to Huawei for comment but had not heard back by the time of publication.
Biden closing in
While the US Commerce Department has yet to announce any official action with regard to the draft amendment, the Biden Administration has moved aggressively to cut off Chinese companies it perceives as a threat to US national security interests.
Late last week the administration unleashed another wave of export bans targeting Chinese companies, including adding OEM Inspur Group to the entities list. Alongside the server manufacturer was Chinese chipmaker Loongson and the US alleges the two companies used their supply chains to funnel US equipment to Chinese military modernization efforts in violation of decades old export bans.
Meanwhile, last fall, Chinese memory vendor YMTC found itself the subject of a similar ban after initially landing on the US "Unverified List" before it was officially added to the "Entities List," effectively cutting the vendor off from US-made chipmaking equipment.
In response the Chinese government by-way of several state-backed investment funds reportedly poured $7 billion into YMTC. Given Huawei's still considerable market share in the global telecom space, it wouldn't be surprising to see the company walk away with a similar cash infusion in the event the trade war worsens. ®