Tech war: China’s top AI server maker Inspur issues bleak profit warning as US chip restrictions bite
- Shares in Inspur Electronic Information Industry fell 10 per cent in Shenzhen on Wednesday after the profit warning
- The warning indicates the firm has few options to hedge the risk of a chip supply shortage, after being placed on US trade blacklist
China’s top artificial intelligence (AI) server maker, which controls about half of the domestic market, warned on Tuesday that its revenue in the first half of 2023 may drop by 30 per cent due to difficulties in obtaining advanced chips, sending its shares sharply lower.
Shares in Inspur Electronic Information Industry, the main listed vehicle of Inspur Group, fell 10 per cent in Shenzhen on Wednesday following the profit warning, which lays bare its exposure to US chip restrictions.
Inspur Group, the world’s second-largest AI server maker, was added to a US trade blacklist earlier this year for allegedly acquiring US-origin items in support of China’s military.
That means US chip firms such as Nvidia and Advanced Micro Devices cannot sell chips to the company without an approved licence.
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The impact of the ban surfaced in a corporate filing by the Shandong-based company late on Tuesday, which stated that its revenue would drop 30 per cent year-on-year in the first half of 2023, while its profit could shrink by up to 70 per cent in the same period “due to a global shortage of GPU and related chips”.
The warning indicates the firm has few options to hedge the risk of a chip supply shortage.
