US Tightens Chinese Chip Exports, Nvidia Shares Falter
The U.S. government’s new restrictions on chip exports to China could pose a challenge for Nvidia.
According to the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), the new rules will address the loopholes in sanctions introduced last year.
The announcement did not single out Nvidia but focused on ‘advanced chips’, but the industry knows this will seriously affect the company, which was profiting from the AI boom. Already, shares for the company are down 4%.
“Today’s updated rules will increase effectiveness of our controls and further shut off pathways to evade our restrictions,” said Secretary of Commerce Gina Raimondo.
“These controls maintain our clear focus on military applications and confront the threats to our national security posed by the PRC Government’s military-civil fusion strategy. As we implement these restrictions, we will keep working to protect our national security by restricting access to critical technologies, vigilantly enforcing our rules, while minimizing any unintended impact on trade flows.”
The BIS will keep displaying its global leadership in regulating advanced computing and AI technologies, said Thea Rozman Kendler, the Assistant Secretary of Commerce for Export Administration.
“These technologies inherently serve as force multipliers for humanitarian good and also for undermining global security and advancing repression. By imposing stringent license requirements, we ensure that those seeking to obtain powerful advanced chips and chip manufacturing equipment will not use these technologies to undermine U.S. national security. We will continue to hone these controls as technology evolves so that our technology is not used to threaten global peace and security.”
The U.S. government criticizes China for blending military and civilian sectors, but the sanctions affect private companies like Nvidia and Intel that own the chips, not the US government. Critics of the move, however, have suggested this move by the U.S. is a form of military-civil fusion strategy.
Based on the sanctions, it appears the U.S. government is okay with if its own companies are harmed by its attempt to stop China’s technological advancement and that the new rules may have been made to frustrate the efforts of companies like Nvidia.
The jury is still out on the motivations behind the U.S. sanctions, but one thing is certain: business has just gotten a lot more complicated for Nvidia.