The government of the United States has placed limits on the export of certain types of chip sales. Nvidia, an American multinational technology corporation, said on Wednesday that Chinese regulators requested that it cease shipping two of its most advanced processing processors for use in artificial intelligence-related projects. Nvidia said that it had been informed by American authorities that the new regulation “would address the potential that the covered items may be utilized in, or diverted to, a military end use’ or military end user’ in China.”

Nvidia and AMD, two of the top chipmakers in the United States, both stated late Wednesday that additional limitations had been implemented by the United States government to prevent China and Russia from obtaining high-end artificial intelligence processors. Although the measures’ primary purpose is to limit China’s and Russia’s military capabilities, there is a possibility that they will also impede technological progress in other fields.

What is the new AI chip ban?

Nvidia revealed on Wednesday evening in a filing with the United States Securities and Exchange Commission that Chinese customers would no longer be able to purchase the company’s “A100 and forthcoming H100 integrated circuits.” The company also stated that this decision could result in a loss of up to $400 million in revenue from sales of high-end chips. Artificial intelligence (AI), data analytics, and high-performance computing data centers are powered by Nvidia’s A100 chipset.

According to the petition, the United States government informed Nvidia that the new prohibition will assist in ensuring that Nvidia’s goods are not “used in” or “diverted to” military equipment manufactured in either Russia or China. Nvidia said that its Chinese clients can petition the United States government for exemptions from the restrictions; however, the company added that it has not received any “assurances” that the government would give such exemptions.

Russia is included in the scope of the sale restriction order, in addition to China. Nvidia does not presently offer any of its products in Russia; nevertheless, the company does have a large number of satisfied clients in China.

How will the ban affect China and Russia?

Since the 26th of August, the price per share of NVDA has been going down. The most recent statement, as was to be anticipated, caused an even steeper price decline. The price of the stock, which was $95 at the end of trading on Wednesday, was at a level that hadn’t been seen in the market since the middle of July. In addition, the price of Nvidia shares dropped by 6.6% after the market closed.

It is important to keep in mind that the husband of U.S. House Speaker Nancy Pelosi sold all of his Nvidia stock around the end of July when the House was considering whether or not to pass the chip bill. The multibillion-dollar law, in and of itself, seeks to expand chip production in the United States, and investors’ excitement over this prospect drove up the price of NVDA shares.

According to the regulatory statement that Nancy Pelosi submitted, her husband, Paul Pelosi, sold 25,000 shares of Nvidia on Tuesday for $165.05, bringing in a total of $4.1 million. The document indicated that Pelosi had incurred a loss of 341,365 dollars as a result of the transaction.

The shares of Advanced Micro Devices, which competes with Nvidia, also responded to the recent order. In the after-market hours, it had a loss of 3.7%. The aforementioned action could make it more difficult for Chinese companies to carry out complex tasks like image recognition. Concurrently, the ruling will have the effect of restricting Nvidia’s commercial activities in China.

Why was the ban implemented?

The business said that the prohibition, which affects its A100 and H100 processors meant to speed up machine learning activities, might interfere with the company’s ability to complete the development of the H100, which is the flagship chip that Nvidia revealed this year.

The United States Department of Commerce said, without providing any information, that it has examined its policies and procedures towards China to “keep sophisticated technology out of the wrong hands.”

In the same vein, a representative for AMD was quoted by Reuters as saying that the business had been informed of new licensing requirements that would prevent the shipment of its MI250 artificial intelligence processors to China. Despite this, the company thinks that its MI100 chips will not be impacted in any way. AMD, on the other hand, has said that it does not expect the new restrictions would have a significant influence on the company’s operations.