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With Tighter Licensing Rules, Nvidia Walks Fine Line

Last week, Nvidia signaled it was going to start cracking down on customers who use consumer graphics chips for business-related projects to avoid higher licensing charges. The move rattled companies that have long used these chips for scientific research. But another Nvidia licensing change, which hasn’t been previously reported, could have a much bigger impact.

Nvidia has introduced new rules that require customers to keep more accurate records of how they use Nvidia’s chips and software. At the same time, Nvidia expanded its authority to audit customers to make sure they follow the rules. While Nvidia’s intentions aren’t entirely clear, it appears customers have less latitude to customize Nvidia software than they have had in the past. The changes could affect tens of thousands of Nvidia customers around the world, said people familiar with the matter.

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Nvidia’s graphics chips are by far the most widely used in artificial intelligence projects, even though the company still makes most of its money from gaming-related products. Nvidia’s market capitalization has soared from around $55 billion at the start of 2017 to around $130 billion currently. Nvidia shares have risen nearly 110% during that period.

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The threat of audits...could cause friction in Nvidia's longstanding relationships with developers.