China’s electric car companies are safe from the US Nvidia chip ban

Nvidia has found success in China by selling automotive chips to the country’s electric car companies. But the American semiconductor giant has been restricted from shipping some products to China. So far, electric car manufacturers do not appear to be affected.

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BEIJING ̵[ads1]2; U.S. restrictions on Nvidia chip sales to China will not affect Chinese electric car companies, as they use car systems that do not include the sanctioned products.

Chipmaker Nvidia’s shares have plunged about 13% this week after the company revealed new US restrictions on exports to China, affecting about $400 million in potential sales in the current quarter.

In China, the Nvidia Drive Orin chip has become a core part of electric car manufacturers’ assisted driving technology. These semi-autonomous driving systems are a key selling point for the companies in what has become a fiercely competitive market in China. Some car manufacturers 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 the sale of these chips is part of the company’s much larger data center business. The products are graphics processors that can be used for artificial intelligence.

“There shouldn’t be any restrictions on Xavier and Orin, and Xpeng, Nio and others will continue to ship with these chips,” said Bevin Jacob, partner at Shanghai-based investment and consulting firm Automobility.

However, Jacob warned that there could be “close scrutiny” in the future on US firms that ship chips related to artificial intelligence and autonomous driving to China.

China’s electric car companies are safe from the US Nvidia chip ban

Xpeng declined to comment. Nio, Li Auto, Huawei and Jidu – a new electric car 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 is unclear what prompted this specific policy move or what might 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 said Thursday.

“The US government has authorized exports, re-exports and transfers into the country necessary to continue NVIDIA Corporation’s, or the company’s, development of H100 integrated circuits,” Nvidia said in a filing Thursday.

The company said second-quarter revenue for its automotive business was $220 million, up 45% from a year earlier.

“Our automotive revenue is fluctuating, and we expect that to be our next billion-dollar business,” Nvidia CEO Jensen Huang said on an earnings call in late August, according to a StreetAccount transcript.

WeRide, an autonomous driving technology startup, said in a statement that “there is no immediate impact from the ban.”

“We believe both the supply and demand sides of the industry will work closely together to manage the ever-changing business environment to ensure the continuous development of technology,” the company said in a statement to CNBC., another autonomous driving startup, said it is not affected, as did automaker Geely.

— CNBC’s Kif Leswing contributed to this report.

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