Image Source: Pixabay

The Biden administration will take additional steps to curb the sales of artificial intelligence (AI) chips developed by Nvidia and other companies in China. The move is an extension of export restrictions unveiled last October. Nvidia’s (NVDA) shares fell 6.6% at the market open after trading downwards in the premarket trading session. 

US Adopts Measures to Address AI Chip Export Loopholes

US authorities plan to adopt new measures to close the loopholes that allow chipmakers to circumvent previously imposed government restrictions and sell their products to China.

According to the reports, the new rules are an extension to the sweeping US restrictions on exports of sophisticated chips and chipmaking equipment to China introduced a year ago. The latest steps are set to block some AI chips that narrowly miss the existing technical criteria. Simultaneously, companies will be required to disclose information about the shipments of other chips.

The Biden administration said the new curbs are designed to prevent the US chips and equipment from reinforcing China’s military capabilities, marking a historic shift in the US-China tech policy. The Chinese government has previously accused the US of abusing export controls to hinder China-based companies.

New Curbs Directly Affect Nvidia, But the Company Doesn’t Expect a ‘Near-Term Meaningful Impact” 

Shares of prominent US chipmakers such as Nvidia, AMD, and Intel fell at the Tuesday market open on the report of new export curbs. At the opening bell, Nvidia’s stock price fell 6.6%, while AMD and Intel both slipped 3.8%.

The downswing comes as the new measures directly restrict the sales of Nvidia’s A800 and H800 chips, designed specifically for the Chinese market. As such, today’s share price drop likely represents investors’ kneejerk reaction to the restrictions, raising concerns that they could exert pressure on the tech giant and possibly limit its performance in the stock market.

However, Nvidia later released a statement in response to the curbs, saying it complies “with all applicable regulations while working to provide products that support thousands of applications across many different industries.”

“Given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial results.”

– Nvidia said in the statement.

$NVDA statement: We comply with all applicable regulations while working to provide products that support thousands of applications across many different industries. Given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial… https://t.co/iMB1docrIY

— Ed Ludlow (@EdLudlow) October 17, 2023

Shares of Nvidia skyrocketed roughly 200% in 2023 thanks to the vital role the company’s high-end chips play in the ongoing AI frenzy. 

More By This Author: