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Nvidia, And AMD Are Grappling With The Latest US Restrictions On China's Inspur

Nvidia, And AMD Are Grappling With The Latest US Restrictions On China's Inspur
After being added to a U.S. export blacklist last week, Nvidia Corp, Advanced Micro Devices Inc, and other tech companies are rushing to determine whether they must halt sales to divisions of China's Inspur Group Ltd.
Inspur was last week added to the US's trade sanctions list for allegedly purchasing items of US origin to aid China's military modernization efforts. The listing prevents businesses from selling Inspur products, such as semiconductors made with American tools, unless they first apply for and receive licenses, which are likely to be rejected.
Referring to the official name of the export, Inspur Group Co Ltd, a US Department of Commerce spokesperson said on Tuesday that it "is reviewing Inspur Group Co Ltd's Entity List entry and will update it as appropriate."
At an investor conference recently, executives from AMD and Nvidia were questioned about their dealings with Inspur Group Co Ltd. AMD stated that it was looking for clarification on the rules.
While not a household name, Inspur's Chinese-listed subsidiary had nearly $10 billion in sales in 2021, and according to market research firm IDC figures for the third quarter of 2022, Inspur Group is the world's third-largest supplier of the servers used in data centers that power cloud computing.
However, chip industry insiders and advisers said firms are assessing whether they should stop supplying Inspur's subsidiaries, including Inspur Electronics Information Industry Co, which is not automatically subject to the restrictions.
If there is a risk of the goods being transferred from the unlisted subsidiary to the listed parent, US regulators may view unlicensed shipments to that subsidiary as a violation of last week's listing.
The corporate address of Inspur Electronics Information Industry Co is the same as that of the blacklisted parent company. In a filing on Monday, the company proposed changing its address. A new address was not specified in the proposal, which shareholders will vote on later this month.
"Shipments to related entities constitute a ‘red flag’ due to the risk of diversion," the Commerce Department spokesperson said in a statement.
Inspur did not respond to a comment request. Last week, a Chinese Embassy official in Washington told Reuters that China was "firmly opposed" to the inclusion of Inspur and 27 other companies on the trade blacklist.
Last week, a Chinese Foreign Ministry spokesperson said the US was "once again cracking down on Chinese companies under false pretenses and through unfair means."
Many of his clients have paused shipments to Inspur's subsidiaries, according to Dan Fisher-Owens, an export law attorney at Berliner Corcoran & Rowe who works with chip firms.
Nvidia Chief Financial Officer Colette Kress said at an investor conference in San Francisco on Monday that the company will "follow export controls very closely," but she did not say whether Nvidia has stopped shipping to Inspur subsidiaries.
"We will probably be working with other partners," Kress said. An Nvidia spokesperson declined to comment beyond her remarks.
A request for additional comment on AMD Chief Technology Officer Mark Papermaster's remarks at the same conference was not returned by an AMD spokesperson.
According to one person familiar with the matter, Inspur's listing is even more restrictive than that of many other companies on the US Department of Commerce's "entity list," and may be comparable to the restrictions imposed on China's blacklisted telecommunications company, Huawei Technologies.
As with Huawei, the listing prevents products from being shipped to Inspur even if they are manufactured in another country but use American technology. Those products cannot also be sold to Inspur's subsidiaries if the blacklisted corporate parent is considered a party to the transaction, according to the person.

Christopher J. Mitchell

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