Chinese electric car companies are safe from the ban on Nvidia chips in the US

BEIJING — Chinese electric car companies will not be affected by U.S. restrictions on the sale of Nvidia chips to China because they use automotive systems that do not include sanctioned products.

Shares of chip maker Nvidia fell about 13% this week after the company disclosed new US restrictions on its exports to China, affecting about $400 million in potential sales for the current quarter.

In China, the Nvidia Drive Orin chip has become a major part of driver assistance technology. These semi-autonomous control systems are an important selling point for companies in the increasingly competitive Chinese market. Some automakers also use Nvidia’s Xavier chip. The automotive industry is a relatively small but fast-growing part of Nvidia’s business.

However, the new U.S. restrictions target Nvidia’s A100 and H100 products — and sales of those chips are part of the company’s much larger data center business. The products are GPUs that can be used for artificial intelligence.

“There should be no restrictions on Xavier and Arin, and Xpeng, Nio and others will continue to supply these chips,” said Bevin Jacob, a partner at Shanghai-based investment and consulting firm Automobility.

Jacob warned, however, that US firms supplying China with chips related to artificial intelligence and autonomous driving could be “scrutinized” in the future.

Xpeng declined to comment. Nio, Li Auto, Huawei and Jidu — a new electric car brand backed by Baidu and Geely — did not respond to requests for comment.

According to the US government, the new US rules are designed to reduce the risk of supporting the Chinese military, Nvidia said in a filing with the Securities and Exchange Commission on Wednesday. But it’s unclear what prompted this particular policy move or what might prompt the next one.

In another positive sign for the chip maker, the US will allow Nvidia to continue developing its H100 artificial intelligence chip in China, the company said on Thursday.

“The US government has authorized exports, re-exports and domestic transfers necessary for the continued development of H100 integrated circuits by NVIDIA Corporation or a company,” Nvidia said in a statement on Thursday.

The company reported second-quarter revenue from its automotive business of $220 million, up 45% from a year earlier.

“Our revenue from the automotive industry is declining, and we expect that to be our next billion-dollar business,” Nvidia CEO Jensen Huang said in an earnings call in late August, according to a StreetAccount transcript.

WeRide, a self-driving technology startup, said in a statement that “the ban does not have an immediate impact.”

“We believe that supply and demand in the industry will work closely together to cope with the ever-changing business environment to ensure the continuous development of technology,” the company said in a statement to CNBC.

Pony.ai, another self-driving startup, said it was unaffected, as was automaker Geely.

— CNBC’s Keef Lesswing contributed to this report.