US in talks with Nvidia about AI chip sales to China – Raimondo

The Biden administration is in discussions with Nvidia Corp NVDA.O about permissible sales of artificial intelligence chips to China but emphasized that it cannot sell its most advanced semiconductors to Chinese firms.

U.S. Commerce Secretary Gina Raimondo, speaking in an interview with Reuters on Monday, said Nvidia “can, will and should sell AI chips to China because most AI chips will be for commercial applications.”

She added: “What we cannot allow them to ship is the most sophisticated, highest processing power AI chips, which would enable China to train their frontier models.”

Raimondo said she spoke a week ago to Nvidia CEO Jensen Huang and he was “crystal clear. We don’t want to break the rules. Tell us the rules, we’ll work with you.”

Raimondo said the department was working with Nvidia. “They want to do the right thing. Obviously they want to sell as many chips as possible.”

Nvidia declined to comment. Last week, Huang said the company was working closely with the U.S. government to ensure new chips for the Chinese market were compliant with export curbs.

The California-based artificial intelligence chip designer has commanded more than 90% share of China’s $7 billion AI chip market, but analysts have said new U.S. curbs on chip exports are likely to create opportunities for Chinese rivals to make inroads.

Reuters last month reported Nvidia had told customers in China it was delaying the launch of a new China-focused AI chip until the first quarter of next year.

“Our plan now is to continue to work with the government to come up with a new set of products that comply with the new regulations that have certain limits.”

Nvidia warned during its November earnings that it expects a steep drop in fourth-quarter sales in China in the wake of the new U.S. rules.