US chip makers hit by new China export rule

Amid worries about potential US limits on the selling of artificial intelligence processors to China, shares of major chip manufacturers Nvidia and AMD have declined.

In order to mitigate the possibility of chips being “used in, or diverted to a ‘military end use’ in China and Russia,” Nvidia claims that the US government needs a new licence, starting immediately.

Many people are concerned that the rule will cost the government millions of dollars in lost revenue.

In New York’s after-hours trade, shares of both chipmakers decreased.

AMD’s stock fell 3.7% while Nvidia’s fell 6.6%.

According to Dan Ives of Wedbush Securities, the new limitations represent a “gut punch for Nvidia.”

Beijing issued a statement in which it said: “The US side should promptly stop its wrongdoing, treat firms from all over the world fairly, and do more things that are favourable to the stability of the international economy.”

The new licence requirement, which Nvidia claimed would affect exports of its A100 and H100 chips, which are intended to accelerate machine learning activities and the systems that integrate them, was disclosed in a US regulatory filing on Wednesday.

The company’s sales to China might drop by about $400 million (£345.2 million), according to Nvidia, “if customers choose not to acquire the company’s alternative product offerings or if the (US government) does not provide licences promptly or denies licences to significant customers.”

The limitations, which would prevent the shipment of AMD’s MI250 processors to China, were not anticipated to have “a meaningful impact” on operations, according to an AMD representative.

Following the February invasion of Ukraine, sales to Russia were banned by both AMD and Nvidia.

According to analysts, China’s ability to purchase chips for advanced computing may be hampered by US rules.

According to Mario Morales, a California-based analyst at market research firm IDC, it might also have an impact on the profits of US manufacturers like Nvidia and AMD.

Both companies are heavily exposed to China, and future developments could have a greater impact on them, particularly if China decides to respond, according to Mr. Morales.