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Concerns over potential US limitations on selling artificial intelligence processors to China have caused shares of major chipmakers Nvidia and AMD to tumble.
According to Nvidia, the US government requires a new license to be issued quickly in order to address the possibility of chips being used in China and Russia.
There are concerns that the rule will result in millions of dollars in lost revenue.
Both chipmakers’ shares fell in New York after-hours trading.
Nvidia’s stock fell 6.6%, while AMD’s fell 3.7%.
According to Dan Ives of Wedbush Securities, the new restrictions represent a “gut punch for Nvidia.”
Chinese authorities have been outspoken in their opposition to the current action. According to official media, “activities by the United States breached international economic and trade regulations and departed from the idea of fair competition.”
According to Beijing in a statement, the US side should promptly halt its wrongdoing, treat companies from all over the world fairly, and do more things that are favorable to the stability of the international economy.
According to the BBC, the US Commerce Department is “not in a position to specify particular policy adjustments at this time.”
Nvidia said in a US regulatory filing on Wednesday that the new license requirement would affect exports of its A100 and H100 chips, which are meant to accelerate machine learning activities and the systems that use them.
Nvidia stated that sales to China might be damaged by $400 million (£345.2 million) if clients do not want to buy the company’s alternative product offerings or if the (US government) does not provide licenses in a timely manner or denies licenses to significant customers.
According to an Nvidia spokeswoman, the company is working with customers in China “to meet their planned or future purchases with other goods.”
Meanwhile, an AMD spokeswoman stated that the rules, which would prevent the shipment of its MI250 chips to China, would not have a “substantial impact” on operations.
Following the invasion of Ukraine in February, both Nvidia and AMD suspended sales to Russia.
Analysts believe the US rules will 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 potentially have an impact on the revenues of US manufacturers such as Nvidia and AMD.
Tensions are escalating between China and the U.S.
Nvidia announced $6.7 billion in revenue for the second quarter, which was much lower than estimates.
However, sales from its data center division, which manufactures computer chips, increased by 61% year on year.
“This is a clear shot across the bow at China and will only stoke the geopolitical fires (tensions). Nvidia has been caught in the crossfire, “Mr. Ives stated
The United States and China have been at odds for a long time over trade and technology.
Tensions between the world’s two largest economies increased earlier this month following US Representative Nancy Pelosi’s controversial travel to Taiwan.
China considers Taiwan, a self-ruled island to be part of its territory and insists on unifying it with the mainland, using force if necessary.