Semiconductor Stocks Plunge Amid New U.S. Export Controls
Explore how fresh U.S. export restrictions are impacting semiconductor giants Nvidia and AMD, causing significant stock declines and reshaping global tech trade dynamics.
Shares of Nvidia and AMD dropped sharply following the announcement of stringent new U.S. export controls targeting sales to China.
Leading semiconductor companies Nvidia (NVDA) and Advanced Micro Devices (AMD) disclosed that recent U.S. export regulations will restrict their ability to sell certain products to China, triggering a steep decline in their stock prices along with other semiconductor equities on Thursday.
Although AMD indicated that these limitations would not substantially affect its overall business operations, Nvidia projected a potential revenue loss of approximately $400 million in the current quarter due to these constraints. In early trading, Nvidia's shares declined by more than 8%, while AMD's stock fell over 5%.
Highlights
- New U.S. export policies impose sales restrictions to China and Russia.
- Stock values of Nvidia, AMD, and other semiconductor firms experienced significant drops.
- U.S. Commerce Department signals possible future expansions of export limitations on critical technologies.
The updated U.S. export regulations now mandate licenses for shipping specific products to China and Russia. A representative from the Commerce Department emphasized that further restrictions might be introduced to curb China's use of these technologies for surveillance and military advancements.
In recent years, the U.S. has intensified controls on exporting sensitive technologies to China, citing concerns that civilian supply chains often facilitate military applications.
The new rules are anticipated to affect Nvidia's A100 and H100 chips, which accelerate machine learning processes, along with related integrated systems. Nvidia ranks among the top ten semiconductor companies based on trailing twelve-month revenue.
AMD reported that its MI250 AI chip sales to China would be impacted, but the company expects no significant overall business disruption.
Both Nvidia and AMD clarified that these restrictions mainly target China, as they have already ceased sales to Russia following its invasion of Ukraine. Research from Yale School of Management indicates that over 1,000 companies have exited Russia since the conflict began.
Year-to-date, Nvidia's stock has declined by over 54%, while AMD's shares have dropped approximately 46%.
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