Two of America’s top chipmakers have been ordered to stop selling some of their technology to China that could be used in artificial intelligence.
Nvidia ( NVDA ) and AMD ( AMD ) said Wednesday they had been told by the U.S. government to stop exporting certain high-performance chips to the world’s second-largest economy.
In a regulatory filing, Nvidia said it had been told by US officials that the requirement is due to a potential risk of the products being used by, or diverted to, a “military end user”.
The restrictions cover Nvidia’s A100 and upcoming H100 integrated circuits, and all systems that include them, effective immediately, it said.
The move threatens to add $400 million worth of business to Nvidia, according to the filing.
That’s roughly what the California-based tech giant projected last week in potential sales to China, which could be affected by the new requirement, the filing said.
Nvidia shares fell 6.6% in after-hours trading on Wednesday, while AMD shares fell 3.7%.
In a statement to CNN Business, Nvidia said it is working with “customers in China to satisfy their planned or future purchases with alternative products and may seek licenses where substitutes are not sufficient.”
AMD, which is also headquartered in California, told CNN Business that it has also received new requirements from the US Department of Commerce that will affect shipments of its MI250 integrated circuits to China.
“At this time, we do not believe that shipments of MI100 integrated circuits are affected by the new requirements,” it said, referring to another line of components. “We currently do not believe that it has a significant impact on our business.”
The new rules are a reminder of how tensions between the US and China remain high over business and technology.
Last week, a rare agreement between the two countries on auditing US-listed Chinese companies had hinted at a breakthrough in relations, but experts have warned that the deal will do little to address other key issues.
The new mandate for chipmakers also covers a ban on exports to Russia, Nvidia and AMD noted.
Both companies said they currently do not sell any products to Russia.