18.10.2023

News of chip export ban to China drops NVIDIA stock by 7%

News of chip export ban to China drops NVIDIA stock by 7%

Shares of NVIDIA fell on news of a tightening of restrictions on the export of chips to China. As of 16:53 Moscow time, quotations of BigTech on the NASDAQ fell by 7.85% to $ 424.8.

The U.S. Department of Commerce in the coming weeks plans to ban exports to China of high-tech chips used in the development of artificial intelligence, reports CNBC. Last year, the U.S. banned NVIDIA from selling H100 chips to China. However, the company was allowed to export the slower H800 and A800 processors. Now they are going to tighten up the requirements, which means that these versions can't be shipped to China either. The H800 and A800 chips are covered by the ban on shipments to China, a senior U.S. official confirmed to Bloomberg.

Some Intel and AMD chip models are also likely to be affected by the new restrictions. Their shares reacted negatively to the news, but the drawdown is not so large -%, AMD - for one day quotes of Intel on NASDAQ decreased by 3.42%, AMD - by 3.99%.

Furthermore, the U.S. authorities plan to continue to restrict the export of equipment used to manufacture semiconductors. At the same time, chips that are part of consumer products, such as game consoles or smartphones, will not be subject to the ban. But if the chips are fast enough, companies will probably have to do a lot of reporting of orders to the Commerce Department.

U.S. Commerce Secretary Gina Raimondo told reporters that the purpose of the export restrictions is to prevent China from gaining access to advanced semiconductor technology that could facilitate breakthroughs in AI development, especially in the military. At the same time, U.S. officials say the ban is not an attempt to limit the growth of China's economy. CNBC notes that if the USA restricts shipments of chips, China could retaliate against U.S. companies that do business in the Asian country.

It was expected that export restrictions would be tightened. A day earlier, Reuters had reported that they could be announced as early as this week. The Wall Street Journal wrote in June this year that the administration of U.S. President Joe Biden is considering a ban on exports to China of chips used in AI. NVIDIA noted in August that these measures would not have a material immediate impact on the company's revenue, but could harm its business in the long term.