Nvidia, AMD grapple with latest U.S. curbs on China’s Inspur

March 7 (Reuters) – Nvidia Corp (NVDA.O), Advanced Micro Devices Inc (AMD.O) and other tech companies are vying to assess whether to continue selling to units of China’s Inspur Group Ltd following its addition to a US -Export must stop Black List last week.

The United States last week blacklisted Inspur for allegedly purchasing US-origin goods in support of China’s military modernization efforts. The listing means companies can’t sell inspur items like semiconductors made with US tooling unless they apply for and receive licenses, which are likely to be denied.

A US Commerce Department spokesman told Reuters on Tuesday that it “will review and update the Inspur Group Co Ltd company list entry,” referring to the official name of the black export list.

AMD and Nvidia executives were briefed on deals with Inspur Group Co Ltd at an investor conference on Monday. questioned. AMD said it was seeking clarification on the rules.

Although not a household name, Inspur’s China-listed subsidiary had nearly $10 billion in revenue in 2021, and Inspur Group is the world’s third-largest supplier of servers used in data centers that serve the industry, according to figures from market research firm IDC Cloud computing operate third quarter 2022, the latest available.

However, chip industry insiders and their advisors said companies are trying to assess whether to stop supplying Inspur’s subsidiaries, including Inspur Electronics Information Industry Co (000977.SZ), which are not automatically subject to the restrictions.

U.S. regulators could consider unlicensed shipments to that subsidiary a violation of last week’s listing if there is a risk that the goods could get from the unlisted subsidiary to the listed parent company. Inspur Electronics Information Industry Co has the same corporate address as the blacklisted parent company.

“Shipments to affiliated companies represent a ‘red flag’ due to the risk of diversion,” the Commerce Department spokesman said in a statement.

Inspur did not respond to a request for comment. Last week, an official at the Chinese embassy in Washington told Reuters that China was “strongly opposed” to Inspur and 27 other companies being blacklisted.

A spokesman for China’s foreign ministry also said last week that the US was “again cracking down on Chinese companies under false pretenses and unfair means.”

Dan Fisher-Owens, an export lawyer at Berlin-based Corcoran & Rowe who works with chip companies, said many of his clients have suspended shipments to Inspur’s subsidiaries to assess the situation.

Colette Kress, Nvidia’s chief financial officer, said at an investor conference in San Francisco on Monday that the company will be “monitoring export controls very closely,” but didn’t comment on whether Nvidia has stopped shipping to Inspur subsidiaries.

“We’ll probably work with other partners,” Kress said. An Nvidia spokeswoman declined to comment beyond her comments.

An AMD spokesperson did not respond to a request for additional comment on comments made by AMD Chief Technology Officer Mark Papermaster at the same conference.

Inspur’s listing is even more restrictive than many other companies on the US Commerce Department’s “entity list” and could be comparable to the restrictions imposed on China’s blacklisted telecoms company Huawei Technologies, a person familiar with the matter said Person.

As with Huawei, the listing restricts products from being shipped to Inspur, even if they’re made in a foreign country but with US technology. Those products also can’t go to Inspur’s subsidiaries if the blacklisted parent company is considered a party to the transaction under a broad definition of the term, the person said.

Reporting by Stephen Nellis and Jane Lee in San Francisco, Alexandra Alper in Washington, Karen Freifeld in New York and Josh Horwitz in Shanghai; Edited by Mark Porter and Anna Driver

Our standards: The Thomson Reuters Trust Principles.