RESEARCH NOTE: Do You Really Think NVIDIA Would ‘Skirt’ USG Export Controls On China Accelerators? Think Again.

By Patrick Moorhead - November 10, 2023

Thursday, there was a flurry of articles written I thought suggested or were interpreted that NVIDIA was trying to ‘skirt’ or ‘pull a fast one’ on U.S. Government Export Control laws with a rumored line of new datacenter accelerator cards for China export. I find this laughable.  The downside for NVIDIA would be immense. The company may be a fierce innovator and competitor, but they aren’t dumb.

Could it be possible that NVIDIA is just delivering sets of cards that fit into the Department of Commerce’s new parametric guidelines delivered October 17 – November 6? I have no inside knowledge of any new NVIDIA cards coming out, but if true, I interpret this as NVIDIA getting a specification from the U.S. Department of Commerce and building products that follow it. Dare I suggest NVIDIA is following the rules and being customer-centric?

Let me follow on with what was released by the U.S. Department of Commerce between October 17 and November 6.

The Department of Commerce came out with updates on China export controls on October 17, called “Advanced Computing Rules” (think datacenter GPUs). It then proceeded to conduct a public briefing webcast on November 6. I urge you to watch the webcast. It speaks in terms almost anybody in semiconductors can understand. You can also find many content links here as well on all the November 6 activities.

The new rules clearly identified three performance “bands” for U.S. vendors like NVIDIA, AMD, and Intel regarding AI accelerator performance and density. The parameters are split between TPP, “Total Processing Performance” for AI defined as a function of TOPS and bit length, and “Performance Density” which is TPP AI performance divided by the die area.

See the chart below from the November 6 webcast:

Do You Really Think NVIDIA Would ‘Skirt’ USG Export Controls On China Accelerators? Think Again.

Source: U.S. Department of Commerce November 6 webcast

NAC = “Notify Advanced Computing”

1/ Red- Requires a license from the DoC to export and re-export these. These have a TPP (Total Processing Performance) above 4800 and nearly anything with a Performance Density above 6. These are reviewed with a “presumption of denial”.

2/ Yellow “Moderate Performance”– Vendor gives USG advanced notice and waits up to 25 days for approval. These have a TPP of 1600 to 4800 but are primarily governed by Performance Density between 1.6-6.

3/ Green– Don’t bother the DoC; it’s OK to sell these all day long. These solutions would be below 1600 TPP and increment up with varying Performance Density.

I find the red, yellow, and green imagery very straightforward.

“Mysteriously,” the rumors of NVIDIA’s new cards for China appear to increment precisely into these three zones- three cards and three zones. Is this a coincidence? Likely not. I have no inside information to say whether these cards are real or just rumors or if these are the exact specifications. And if any of the cards were outside the new parameters, NVIDIA, of course, would modify them.

Net-net, there’s no smoking gun here, but it sure made for some great clicks!

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.