Jim Cramer may not be worried about Nvidia's business in China, but the U.S. government certainly is, and a government official over the weekend reiterated just how much the Biden administration wants the company to stop doing business with its biggest economic rival.
The China issue came to the fore once again in October after the U.S. Commerce Department said that it was closing the loopholes that had allowed Nvidia (NVDA) -) to sell throttled-down AI chips to Chinese companies.
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Nvidia's stock rose in November on reports the company would soon unveil a new series of AI chips designed for its customers in China that would comply with the export rules the U.S. government imposed in October 2022, banning high-tech exports by U.S. companies to China.
Over the weekend, U.S. Trade Secretary Gina Raimondo once again made it clear that there will be no loopholes for Nvidia to jump through.
“We cannot let China get these chips. Period," Raimondo said at the Reagan National Defense Forum on Saturday, according to Bloomberg. "We’re going to deny them our most cutting-edge technology.”
The government reiterated its position that selling these advanced chips to China creates national security issues for the U.S., and national security is more important than company profits.
“I know there are CEOs of chip companies in this audience who were a little cranky with me when I did that because you’re losing revenue,” she said. “Such is life. Protecting our national security matters more than short-term revenue.”
She reportedly even called out Nvidia, saying "If you redesign a chip around a particular cut line that enables them to do AI, I'm going to control it the very next day."
To enforce the mandate, Raimondo said that the Commerce Department needs more money.
“I have a $200 million budget. That’s like the cost of a few fighter jets. Come on,” she said. “If we’re serious, let’s go fund this operation like it needs to be funded.”
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Nvidia CEO Jensen Huang has said in the past that the U.S. risked enormous damage" to its tech sector as a result of tighter China restrictions, saying the new rules would “cut the Chips Act off at the knee."
"If China can’t buy from the United States, they’ll just build it themselves," Huang told the FT last spring. "So the US has to be careful. China is a very important market for the technology industry.”
Nvidia noted in a Securities and Exchange Commission filing in October, however, that "given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial results" as a result of the new U.S. restrictions.
Nvidia shares were down by more than 1% premarket on the news.
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