Shares of NVIDIA Corporation (NASDAQ: NVDA) nosedived in regular trading Tuesday after U.S. Trade Secretary Gina Raimondo introduced expanded restrictions on advanced tech sales to China.
These newly introduced restrictions build upon new export regulations established last year. The primary goal of these measures is to limit China’s access to “advanced semiconductors with the potential to drive advancements in artificial intelligence and sophisticated computers, which have crucial implications for military applications in China,” according to Raimondo.
These updated regulations also closed a previous loophole that had allowed NVIDIA to sell its A800 and H800 semiconductors, instead focusing on overall performance metrics rather than individual chip computing power.
Moreover, the restrictions extend to a novel NVIDIA technology used in “computational lithography” software integral to the AI chip design process.
In an earlier interview with London’s Financial Times, NVIDIA CEO Jensen Huang had expressed concerns, emphasizing that the tighter restrictions on China could potentially inflict “enormous damage” to the U.S. tech sector. He warned that these new rules would jeopardize the “Chips Act” and potentially prompt China to develop these technologies domestically.
The Biden administration has been actively working to redirect AI-related technology investments away from China. Japan, the host of this year’s G-7 Summit in Hiroshima, is poised to be one of the primary beneficiaries of these efforts.
China’s Ministry of Foreign Affairs strongly criticized these efforts earlier this year, characterizing them as “economic coercion and sci-tech bullying,” and argued that they deviate from the principles of a market economy and fair competition.
Market reactions to this news were swift and pronounced. NVIDIA (NASDAQ: NVDA) shares plummeted by 4.68%, closing at $443.89 per share on Tuesday, while its AI rival, Advanced Micro Devices (AMD), saw a 1.24% decline to $105.14 per share. Intel (INTC) shares also dipped by 1.37%, with Marvell Technology (MRVL) experiencing a 0.91% decrease in stock prices.