Nvidia, Advanced Micro Devices (AMD) and other tech firms are trying to assess whether they must halt sales to units of China’s Inspur Group after its addition to a U.S. export blacklist last week, Reuters news report said.
The United States last week added Inspur to its trade blacklist for allegedly acquiring U.S.-origin items in support of the China’s military modernization efforts. The listing means that companies cannot sell Inspur items like semiconductors, which are made with U.S. tools, unless they apply for and get licenses.
A U.S. Department of Commerce spokesperson told Reuters that it “is reviewing Inspur Group’s Entity List entry and will update it as appropriate,” referring to the official name of the export blacklist.
Executives from AMD and Nvidia were questioned about dealings with Inspur Group at an investor conference on Monday. AMD said it was seeking clarification on the rules.
Inspur’s Chinese-listed subsidiary had nearly $10 billion in sales in 2021 and Inspur Group is the world’s third-largest supplier of the servers used in data centers that power cloud computing, according to market research firm IDC figures for the third quarter of 2022.
Inspur Information ranks second in the global server market with a worldwide market share of 10.4 percent according to Gartner, which released its global server market analysis for the first quarter of 2022.
Inspur Information has the largest market share in the global public cloud server market, according to Synergy Research Group.
Inspur offers a range of products and solutions to hyperscale data centers. In an effort to improve efficiency, TCO, and environmental sustainability, Inspur Information is making liquid-cooling technology available to all of its products in 2022. Inspur has built the largest liquid-cooled data center development and manufacturing facility in Asia, with the capability of delivering liquid-cooling solutions for hyperscale data centers and a capacity of 100,000 servers per year.
Chip industry insiders and their advisers said firms are trying to assess whether they must halt supplying Inspur’s subsidiaries, including Inspur Electronics Information Industry, which is not automatically subject to the restrictions.
U.S. regulators could view unlicensed shipments to that subsidiary as a violation of last week’s listing if there is a risk of the goods going from the unlisted subsidiary to the listed parent.
Inspur Electronics Information Industry has the same corporate address as the blacklisted parent company. The company on Monday proposed changing its address in a filing. The proposal, which shareholders will vote on later this month, did not specify a new address.
“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 return a request for comment. Last week, an official from the Chinese Embassy in Washington told Reuters that China was firmly opposed to the placement of Inspur and 27 other companies on the trade blacklist.
A Chinese Foreign Ministry spokesperson last week said the U.S. was once again cracking down on Chinese companies under false pretexts through unfair means.
Dan Fisher-Owens, an export law attorney at Berliner Corcoran & Rowe who works with chip firms, said many of his clients have paused shipments to Inspur’s subsidiaries to assess the situation.
At an investor conference in San Francisco on Monday, Nvidia Chief Financial Officer Colette Kress said the company will follow export controls very closely but did not comment on whether Nvidia has stopped shipping to Inspur subsidiaries.
“We will probably be working with other partners,” Kress said.
An AMD spokesperson did not return a request for additional comment on AMD Chief Technology Officer Mark Papermaster’s remarks made at the same conference.
Inspur’s listing is more restrictive than many other companies on the U.S. Department of Commerce’s “entity list,” and may be comparable to the curbs placed on China’s blacklisted telecommunications company, Huawei Technologies, one person familiar with the matter said.
As with Huawei, the listing restricts the shipment of products to Inspur even if they are made in a foreign country but with U.S. technology. Those products also cannot go to Inspur’s subsidiaries if the blacklisted corporate parent is considered a party to the transaction, under a broad definition of the term, the person said.
