Nvidia Faces Potential Impact from Expanded US AI Chip Export Controls to China
The US plans to broaden export controls on AI semiconductor chips, potentially affecting Nvidia's specially designed chips that comply with current regulations.
US regulators aim to expand the list of semiconductor chips subject to export controls
Key Highlights
- Nvidia's stock initially dipped but later recovered after news of expanded US restrictions on AI-capable chip exports to China.
- The proposed controls may include Nvidia's recently developed chips tailored to align with existing export rules for Chinese markets.
- China accounts for nearly 20% of Nvidia’s revenue, as revealed in its latest quarterly earnings.
The Biden administration is set to tighten restrictions on the sale of advanced AI semiconductor chips to Chinese companies, intensifying challenges for AI chip leader Nvidia (NVDA).
The updated regulations will broaden the scope of the Commerce Department's export controls to cover chips that Nvidia engineered specifically to comply with US guidelines for sales to Chinese firms and their overseas subsidiaries.
Following the US's October 2022 announcement restricting AI-capable chip sales to China, Nvidia adapted two of its chips: the H800 was created to replace the banned H100 chip for China, and the A800 was designed as a substitute for the A100 chip for Chinese customers. Reuters recently reported that the H800 chip could be included in the expanded export restrictions.
News of the expanded export controls initially caused Nvidia’s shares to dip slightly on Monday despite overall market gains, but the stock rebounded to rise 1% by early afternoon Eastern Time. Nvidia’s quarterly earnings report indicated that nearly one-fifth of its $13.5 billion revenue comes from China.
This regulatory expansion is part of a broader US government effort to limit AI technology exports. In August, Nvidia revealed in a regulatory filing that the US had extended AI chip export restrictions to certain Middle Eastern countries.
At that time, Nvidia stated the restrictions would not have an immediate significant financial impact but acknowledged potential long-term effects on its competitive edge.
Similar export controls could also affect Advanced Micro Devices (AMD), although AMD’s shares rose 2% during midday trading amid a generally positive market.
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