Nvidia and Advanced Micro Devices (AMD) have been told by US officials to stop exporting their flagship artificial intelligence chipsets to China, according to a Reuters report. 

The announcements from Nvidia and AMD sent their stock prices tumbling by 7.6% and 3% respectively. While Nvidia has said that the restrictions are likely to hurt their prospects in China both financially and otherwise, AMD has reported no such issues. 

Here’s what you need to know:

Which chips have been affected by the restriction?

The US Department of Commerce has banned a total of three chips, two from Nvidia and one from AMD. The A100 and H100 chips from Nvidia have been restricted, while at AMD, it is the MI250 chipset. 

Why these chips specifically?

The chipsets from Nvidia and AMD were originally designed for graphic processing cards (GPUs) that are used in the video game industry to produce high fidelity graphics and provide an overall boost in performance.

However, because of their processing capabilities, chips like the A100, H100 and MI250 are used for a wider range of computing tasks. Chinese firms have been using them to handle AI work like image recognition. 

The cost of these chips runs into hundreds and thousands of dollars and are seen as an effective way to deal with AI-based computational tasks. The three chipsets are extremely efficient at carrying out large calculations for AI-based tasks with extreme precision.

While calculations can be done on less powerful chips, the results are only suitable for minor photo-scanning work, like identifying which friends are in a photo. But high-powered chips like these are required for designing fighter jet targeting and navigation systems. Restricting these chips from sale in China is likely to affect Chinese firms’ ability to work on high-end technology. 

Why has the US restricted the sale of these chips?

Nvidia and AMD are both chip suppliers that are American companies which means that the US controls access to the technology. The US wants to slow down China’s AI growth, Emily Kilcrease, a senior fellow at the Center for a New American Security told Reuters. Additionally, the US is worried about the chipsets being used in military-grade applications like scouring digital imagery beamed from satellites. 

In the US itself, a version of AMD’s MI250 chipset is being used at the Oak Ridge National Laboratory, one of the country’s many supercomputing sites which support nuclear weapons.

Do Nvidia and AMD have competitors?

 Nvidia and AMD have dominated the extremely high-powered chipset industry. Nvidia more so than AMD, by and large. However, in the last few years Intel has been cooking up their own chipset which it hopes will be able to take on the two powerhouses in the industry. In the past, Intel products have not come close to the processing power and scalability offered by Nvidia and AMD. 

Currently, Intel is developing its unreleased Ponte Vecchio chip but has already found a buyer for it, the Argonne National Lab, another nuclear weapons support lab, according to Reuters.

Intel’s business operations have not seen any change, according to a statement the company gave Reuters. So far, they have received no export control rules from the Department of Commerce.