Trump's Move to Roll Back Chip Export Restrictions Benefits Nvidia—But Analysts Caution It's Temporary
President Trump's initiative to repeal Biden-era chip export restrictions offers Nvidia and other semiconductor companies a temporary reprieve, though experts warn stricter regulations may follow.
Key Insights
- President Donald Trump plans to overturn Biden-era chip export controls scheduled to begin later this month, providing short-term relief to Nvidia and other chip manufacturers.
- Analysts from Citi and Deutsche Bank caution that the reprieve might be brief, as Trump aims to introduce new, possibly more stringent rules.
- Jefferies anticipates a government-to-government strategy in implementing new chip regulations, potentially using them as leverage in tariff discussions, which could delay enforcement.
The Trump administration's reported intention to rescind Biden-era semiconductor export restrictions set for imminent implementation could benefit Nvidia (NVDA) and its peers. However, industry analysts warn this relief may be fleeting.
A representative from the Commerce Department's Bureau of Industry and Security informed Investopedia that the administration plans to replace the current rules with alternative measures, which Citi and Deutsche Bank experts believe might be tougher than those under Biden.
"Though this development temporarily eases constraints on AI-related semiconductor firms by removing complex AI Diffusion regulations, the U.S. government's primary objective to limit AI semiconductor access remains intact," noted Deutsche Bank analysts.
Jefferies analysts, in a client briefing, expect the Trump administration to adopt a government-level approach to new regulations, similar to its tariff strategies, using AI chip export controls as negotiation tools, potentially prolonging the rollout period.
Uncertainty and Opportunity Await as Details Unfold
"The specifics won't be clear for some time," Jefferies stated, suggesting Nvidia and other chipmakers have an extended window to market unrestricted products, albeit amid significant uncertainty. Nvidia has yet to comment on these developments.
This announcement follows Nvidia's recent disclosure of an anticipated $5.5 billion impact on its fiscal first-quarter earnings, linked to newly imposed U.S. licensing requirements for selling H20 chips to China.
If enforced, Biden's AI diffusion rule could further reduce Nvidia's earnings by 11% to 14%, according to Bank of America Securities' worst-case projections.
Nvidia's shares rose nearly 1% in recent trading but have declined approximately 12% year-to-date, reflecting investor concerns over AI investment trends and export limitations.
"Expect significant market volatility in the meantime," Deutsche Bank concluded.
If you have news tips for Investopedia reporters, please contact us at tips@investopedia.com.
Explore useful articles in Government News as of 14-02-2024. The article titled " Trump's Move to Roll Back Chip Export Restrictions Benefits Nvidia—But Analysts Caution It's Temporary " offers in-depth analysis and practical advice in the Government News field. Each article is carefully crafted by experts to provide maximum value to readers.
The " Trump's Move to Roll Back Chip Export Restrictions Benefits Nvidia—But Analysts Caution It's Temporary " article expands your knowledge in Government News, keeps you informed about the latest developments, and helps you make well-informed decisions. Each article is based on unique content, ensuring originality and quality.