Concerns over potential U.S. limitations on selling artificial intelligence processors to China have weighed on the shares of leading chipmakers Nvidia and AMD.
According to Nvidia, the U.S. government demands an immediate new license to handle the risk of chips being “used in China and Russia.”
There is concern that the rule will result in millions of dollars in lost revenue.
Shares of both chipmakers fell in New York after-hours trade.
Nvidia’s stock was down 6.6%, while AMD’s was down 3.7%.
According to Wedbush Securities analyst Dan Ives, the new restrictions represent a “gut punch for Nvidia.”
Chinese officials have been outspoken in their opposition to the latest development. According to official media, “activities by the United States breached international economic and trade regulations and undermined the principle of fair competition.”
“The U.S. side should promptly cease its wrongdoing, treat firms from all over the world, including Chinese companies, fairly, and do more things that are beneficial to the stability of the global economy,” Beijing said in a statement.
According to the BBC, the U.S. Commerce Department is “unable to detail precise policy adjustments at this time.”
Nvidia said in a regulatory filing in the United States on Wednesday that the new licensing requirement will affect exports of its A100 and H100 chips, which are designed to accelerate machine learning activities and the systems that use them.
Nvidia said that “if customers do not wish to acquire the company’s alternative product offerings or if the (U.S. government) does not provide licenses in a timely manner or denies licenses to significant customers,” sales to China might be damaged by $400 million (£345.2 million).
According to an Nvidia spokeswoman, the company is working with Chinese customers “to meet their planned or future purchases with other goods.”
Meanwhile, an AMD spokeswoman stated that the laws prohibiting the shipment of its MI250 chips to China are not expected to have a “significant impact” on operations.
Following the invasion of Ukraine in February, both Nvidia and AMD ceased sales to Russia.
According to analysts, the U.S. rules may make it more difficult for China to obtain modern computing chips.
According to Mario Morales, a California-based analyst at market intelligence firm IDC, it might have an impact on the revenues of U.S. manufacturers such as Nvidia and AMD.
Escalating tensions between the U.S. and China
Nvidia announced $6.7 billion in revenue for the second quarter, which was much lower than expected.
However, it reported that revenue from its data center division, which manufactures computer chips, increased by 61% year on year.
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“This is a direct aim at China, and it will stoke the geopolitical fires (tensions). Unfortunately, Nvidia has become entangled in the crossfire, “Mr. Ives explained.
The U.S. and China have been at opposing ends over trade and technology for many years.
Tensions between the world’s two largest economies increased earlier this month following a controversial visit to Taiwan by U.S. Representative Nancy Pelosi.
China still see Taiwan a part of its territory and insists on unifying it with the mainland, even if it requires the use of force.
