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NVIDIA and several other chip manufacturers saw their stocks drop on Tuesday morning after the United States announced new restrictions on the export of artificial intelligence chips to China.
Chip stocks have surged in the past year due to increased demand for AI products and services, driven by AI chips.
The new export restrictions to China represent a step up from previous restrictions that the Biden administration had implemented over the past year.
Nvidia closed with a 4.7% decline, and Broadcom closed with a 2% decline. Meanwhile, Maravilla and Intel, for the most part, recovered at the final bell, recording drops of 0.9% and 1.4%, respectively.
Export Restrictions on Nvidia Chips for National Security
The new restrictions prohibit the sale of the slowed-down versions of Nvidia chips, the H800 and A800, which could be exported to China under the old restrictions.
"The updates are specifically designed to control access to computing power, which will significantly slow the development of China's next-generation frontier model and could be exploited in ways that threaten the U.S. and our allies, especially as they could be used for military and modernization purposes," said U.S. Secretary of Commerce Gina Raimondo in a call with journalists.
Nvidia believes that the increased restrictions will not have an immediate material impact on its financial performance. However, the company expects long-term sales loss, as stated in an August press release.
Source: Piazza, J. (October 17, 2023). Nvidia stock falls after U.S. announces new restrictions on AI chip exports. Retrieved from CNB.
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