The US plans a full tech embargo on China, Russia, and Iran, with NVIDIA potentially paying the price
As geopolitical tensions rise, the United States is set to escalate its strategy by implementing an unprecedented embargo on technology exports to China, Russia, and Iran. Spearheaded by the Biden administration, this move could reshape the global semiconductor industry, with NVIDIA possibly bearing the brunt of the fallout.
A Bold and Aggressive Tech Embargo
The sanctions in question are designed to cut off access to vital Western technologies for countries the U.S. views as adversaries. Central to these restrictions are two key pillars of modern technological advancement: lithography equipment used in the production of semiconductors, and advanced AI chips that power innovations in artificial intelligence.
While some restrictions have already been in place, the new measures represent a significant escalation. Companies like ASML, Tokyo Electron, and Canon have already been prevented from selling high-end lithography machines to Chinese firms. Similarly, leading chipmakers such as NVIDIA, Intel, and AMD have been forced to withdraw their most sophisticated products from Chinese markets. These developments underscore the growing divide between the technological ecosystems of the West and China, which has become a flashpoint in the broader global rivalry.
The Stakes for NVIDIA
Among the companies most at risk is NVIDIA, which has heavily relied on China as a key market. The demand for high-performance chips in China has been a major driver of the company’s growth, and losing this market could severely damage NVIDIA’s revenue and its future prospects in AI hardware.
CEO Jensen Huang has voiced repeated concerns about the long-term consequences of the embargo, cautioning that isolating China from Western tech may not stifle its progress but could instead accelerate its own technological development. “Eventually, everyone loses,” Huang has warned—a sentiment shared by many in the industry, who fear that the tech embargo could lead to the fragmentation of global innovation networks.
In response to earlier restrictions, NVIDIA made adaptations by creating scaled-down versions of its flagship AI chips, such as the A800 and H800, to comply with U.S. regulations. While this workaround allowed the company to maintain some presence in China, upcoming sanctions may close that loophole entirely, leaving NVIDIA with limited options.
New Sanctions on the Horizon
The latest package of sanctions from the Biden administration, set to take effect on November 16, introduces stricter criteria for banning tech exports. Instead of focusing on data transfer capabilities, the new rules target performance thresholds, which will effectively prevent the sale of NVIDIA’s modified chips in restricted markets.
Additionally, the sanctions will extend restrictions on lithography equipment, a critical component in semiconductor manufacturing. This will likely impact Chinese firms like Biren and Moore Threads, which have so far managed to avoid the worst effects of previous sanctions.
A Double-Edged Sword for Global Innovation
While the U.S. aims to curb the technological advancements of its rivals, these sanctions could have an unintended consequence: they might accelerate the development of domestic semiconductor ecosystems in China. With substantial investments already pouring into research and development, China is positioning itself to become more self-reliant in AI hardware and semiconductor production.
This presents a difficult paradox for U.S.-based companies like NVIDIA. On one hand, compliance with these sanctions is non-negotiable. On the other, cutting off a crucial market could erode their competitive edge over time, as China intensifies its efforts to develop homegrown alternatives to Western tech.
The Future of the Global Tech Landscape
This latest round of sanctions marks a new phase in the ongoing U.S.-China tech rivalry, with global implications for innovation, supply chains, and economic growth. While these measures may restrict short-term access to cutting-edge AI chips and lithography equipment, they are likely to drive the emergence of alternative solutions and new partnerships in restricted markets.
For NVIDIA and other leaders in the tech industry, navigating this increasingly fragmented landscape will be a delicate challenge. Companies will need to find a balance between compliance with regulations and maintaining their global ambitions. As these sanctions take effect, the world will be watching.