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Nvidia Stock Declines As US Government Restricts Chinese Sales

Chip manufacturer Nvidia has suffered a 6.5% decline in stock price during extended trading following US government orders that restrict the exportation of two high end computing chips for AI to China.

The US intends to hamstring China by restricting the A100 and the H100 chips, which would be used by the latter for military purposes such as image and facial recognition.

The US government told Nvidia that the exportation of the two chips would require a new license for future exports to China. This new rule also applies to Russia, however the US chip maker has stated that it has no paying customers there.

“The license requirement also includes any future Nvidia integrated circuit achieving both peak performance and chip-to-chip I/O performance equal to or greater than thresholds that are roughly equivalent to the A100, as well as any system that includes those circuits.”

Nvidia’s A100 chip

Nvidia say that the business affected by the new restrictions could result in a loss of $400 million USD (~A$586.7 million)

The company previously forecast a revenue of $5.9 billion USD (~A$8.65 billion) for the quarter.

Nvidia has stated that it is working with Chinese customers in finding them suitable alternatives, and applying for licenses where a replacement for the affected chips does not exist.

“We are working with our customers in China to satisfy their planned or future purchases with alternative products and may seek licenses where replacements aren’t sufficient,” said a company spokesperson to CNBC.

“The only current products that the new licensing requirement applies to are A100, H100 and systems such as DGX that include them.”

The US government has increased its restrictions on chip exports from the US to China, with the concern that they would be used in ways that affect US security, such as for military purposes or for stealing trade secrets.

AMD, Nvidia’s main rival, also saw a decline of 3.7%. A company spokesperson has said that it believes the new rules would restrict its MI250 AI chip, but that it’s MI100 would still be available for export, and that the change should not have a material impact on business.

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