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The U.S.-China dispute continues to disrupt the business landscape for major tech groups. While Chinese companies such as Huawei, SMIC, and Hua Hong Semiconductor are primary targets of sanctions, Western companies are also feeling the pressure—none more so than Dutch semiconductor giant ASML and California-based Nvidia.
Both companies depend heavily on the Chinese market. Yet sanctions imposed by the U.S. and Dutch governments bar them from selling many of their most advanced products to Chinese customers. Still, they’re working to protect their commercial interests, as abandoning China entirely is not a viable option. However, Nvidia recently announced plans to open a new integrated circuit design facility in Shanghai.
Some U.S. Lawmakers See This Move as a National Security Threat
According to The Wall Street Journal, Republican Sen. Jim Banks of Indiana and Democratic Sen. Elizabeth Warren of Massachusetts sent a letter to Nvidia CEO Jensen Huang, warning that the Shanghai facility could give China access to the tools needed to design advanced GPUs for AI.
Nvidia responded quickly. A company spokesperson said the facility is intended to lease new space for employees returning to in-person work after the pandemic and that its operational scope will remain unchanged. But this explanation has failed to convince the lawmakers.
“No American company should be helping the Chinese Communist Party close the AI gap.”
“No American company should be helping the Chinese Communist Party close the AI gap,” Banks said—a direct accusation that raises serious concerns for Huang and Nvidia. The bipartisan nature of the criticism could make it harder for the company to move forward with its plans in China.
The timing could not be worse for Nvidia. The company recently developed a new GPU based on its Blackwell architecture to replace the H20 chip, which the U.S. Department of Commerce recently banned from sale in China under updated sanctions. Nvidia hopes to begin production of the new GPU with chipmaker TSMC in June, aiming to supply Chinese customers.
However, given the political climate, the Commerce Department could still block Nvidia from delivering the new GPU to China. The outcome remains uncertain, but the outlook is increasingly difficult for Huang and his company.
Image | Nvidia
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