The US government feels there is a potential risk that the chips could be used for military end-uses.

Nvidia (NASDAQ: NVDA) and AMD (NASDAQ: AMD) have been told by the US government to suspend exports of certain high-performance chips, that have application in artificial intelligence, to China.

Nvidia clarified in a regulatory filing that US officials had taken the step due to fears that the chips could potentially land up in the hands of a “military end user.” (CNN Business)

The ban could put about $400 million worth of business in jeopardy for Nvidia, as it covers Nvidia’s A100 and the soon-to-arrive H100 integrated circuits. For AMD, the US government’s move will hit shipments of its MI250 integrated circuits to China.

“At this time, we do not believe that shipments of MI100 integrated circuits are impacted by the new requirements,” AMD said to CNN, referring to another line of components. “We do not currently believe it is a material impact on our business.”

Nvidia said to CNN it was working with “customers in China to satisfy their planned or future purchases with alternative products and may seek licenses where replacements aren’t sufficient.”

According to analysts, the nonavailability of these critical chips could seriously hamper the ability of Chinese companies to conduct advanced AI works such as image recognition. However, the move by the US also ups the ante in its ongoing crackdown aimed at China’s technological abilities, as well as the tensions surrounding Taiwan.

“We are taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and end-users to protect U.S. national security and foreign policy interests,” a U.S. Department of Commerce spokesperson told Reuters.

The ban also covers exports of these products to Russia; however both Nvidia and AMD said they do not sell to that country.

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