US Prepares New Restrictions on NVIDIA as Huang Scandal Hurts Company

The controversy surrounding NVIDIA CEO Jensen Huang has weakened the company’s position in Washington and increased the chances of new restrictions on AI chip exports to China.

The investigation into Huang’s alleged connection to a woman suspected of spying for China has complicated one of NVIDIA’s main goals: preventing tighter rules on sales of its products to Chinese companies. The controversy has increased the likelihood that Congress will include chip export restrictions in a defense bill that must pass by the end of the year.

NVIDIA has opposed such initiatives for more than a year, but the company is now counting on support from technology corporations and major customers. NVIDIA’s supporters argue that supplying China with powerful chips is necessary to maintain US leadership in the AI race. Opponents of the deal warn of a threat to national security.

The Chip Security Act has emerged as the most likely candidate for inclusion in the defense bill. It would require advanced chips to have location and tracking systems intended to help combat smuggling. NVIDIA and other manufacturers warn that the measures would increase costs. Two broader initiatives are also under discussion, covering chipmaking equipment and sales of AI accelerators abroad.

House Foreign Affairs Committee Chair Brian Mast said the controversy had weakened Huang’s ability to oppose the restrictions “100%.”

The situation has also created an opportunity for NVIDIA’s competitors to strengthen their positions. Microsoft and Amazon, for example, could benefit from restrictions on shipments to China: More chips would remain available for US customers, and Chinese AI companies would have a harder time competing with the US.

Source: iXBT.games