US export restrictions are projected to cost NVIDIA $400 million and delay H100 development completion.
On August 26, 2022, the U.S. government imposed a new license requirement, effective immediately, for any future export to China (including Hong Kong) and Russia of Nvidia's A100 and forthcoming H100 integrated circuits. The requirement applies to any GPU achieving "both peak performance and chip-to-chip I/O performance [that are] roughly equivalent to the A100" as well as systems based on them. An export license is needed to ship actual products to clients for revenue and product samples to partners to support product development.
In response to filings with the SEC, the U.S. Department of Commerce authorized Nvidia to continue certain operations under temporary exemptions. The company was authorized to keep developing its H100 compute GPU and systems in China, use its Hong Kong facility for A100 and H100 order fulfillment and logistics through September 1, 2023, and export A100 GPUs and parts to China to support U.S. customers through March 1, 2023. These authorizations provide what Nvidia characterized as "7–12 months" to find new manufacturing and repair partners without disrupting ongoing operations.
The impact of these new policies is substantial. Nvidia warned that the restrictions "may already cost the company some $400 million in sales this quarter," representing a significant portion of the company's data center revenue, which totaled $3.806 billion in the previous quarter. The company also cautioned that "the new license requirement may impact the Company's ability to complete its development of H100 in a timely manner or support existing customers of A100 and may require the company to transition certain operations out of China." Unable to ship product samples to manufacturing partners in China could prevent Nvidia from finishing H100 development on schedule, which would affect data center revenue in Q4 FY2023 (ending in late January 2023). Despite these challenges, Nvidia stated it is "engaged with the USG and is seeking exemptions for the company's internal development and support activities."