The Biden administration announced restrictions around the sale of advanced AI chips to China on Tuesday. While the restrictions only apply to some of the most advanced models, the question becomes what implications this could have on chipmakers like Nvidia (NVDA) and AMD (AMD) going forward. Patrick Moorhead, Moor Insights & Strategy Founder & CEO joins Yahoo Finance to discuss the impacts these restrictions could have on businesses.
Moorehead adds: "When you're talking about exports of a card about the size of a package of cigarettes, its really hard to keep that out of a certain country, it's very easy to bring in on a boat, on an airplane, so I'm very skeptical that the current embargo of the Nvidia products in China is going to have any impact on the speed at which China is going to be able to create large language models and other foundational models out there."
SEANA SMITH: Patrick, some of the pressure that we've seen throughout the chip industry this week largely coming because of the crackdown that we heard from the Biden administration in terms of the restrictions that they're putting in place for chips sent to China. How should we be viewing this? I guess, how big of a revenue impact do you see this potentially being for some of those names most directly affected when you take into account the exposure that NVIDIA, Intel, AMD, just to name a few, have in that space and what that means for their business going forward?
PATRICK MOORHEAD: Yeah, so there have been export controls for decades on the amount of flops as an example that supercomputers could use chips from Intel. This latest shot across the bow here is very specifically focused on NVIDIA because they are the 800-pound gorilla in the AI training market in particular for this latest generation of generative AI.
I don't see as much of an impact on AMD, if nothing else, because they're not participating very heavily in this market right now. If it does become protracted, I do think it could slightly impact AMD's growth potential. But again, this is a net upside for AMD anyways and I think the same for Intel who, while they have some data center capability out there, it's not nearly the performance right now that the administration is worried about.
And you didn't ask me this question, but I'm going to put this out there anyways. I think when you're talking about cutting off exports of a card that's about the size of a package of cigarettes, it's really hard to keep that out of a certain country. It's very easy to bring in on a boat, on an airplane. So I'm very skeptical that the current embargo of the NVIDIA products in China, the latest one, is going to have any impact on the speed at which China is going to be able to create large language models and other foundational models out there.