New US curbs on sales of Nvidia AI chips to China trigger sales

The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California February 11, 2015. REUTERS/Robert Galbraith/File Photo

Sept 1 (Reuters) – New restrictions on exports of cutting-edge chips from Nvidia Corp ( NVDA.O ) to China have signaled an escalation in the U.S. crackdown on Beijing’s technological prowess and spooked investors already worried about a slowdown in the industry.

Nvidia shares fell 11% to $133.46 on Thursday, wiping out more than $40 billion in market value and dragging the Philadelphia SE Semiconductor Index (.SOX) down more than 4%.

US moves to restrict exports of two of Nvidia’s top artificial intelligence chips – the H100 and A100 – to China could hurt the company’s business in the key market, according to a filing on Wednesday. read more

The action from Washington comes as tensions rise over access to advanced chip technology and the future of Taiwan, where Nvidia and nearly all other major semiconductor companies source their chips.

“On the surface, it looks like the US government wants to refrain from selling next-generation advanced chips, 7 nanometers and below, especially for military end-uses in China,” said Angelo Zino, an analyst at CFRA Research.

Rival Advanced Micro Devices Inc ( AMD.O ) was also asked on Wednesday to stop exporting AI chips to China.

The Nvidia and AMD chips targeted by Washington are used for AI and machine learning applications, particularly building training modules for tasks such as natural language processing.

These modules can also be useful for military in modeling bomb simulations and designing weapons.

Market watchers say the restrictions are likely to hit a number of Chinese technology companies, including Alibaba Group Holding Ltd ( 9988.HK ), Tencent Holdings Ltd ( 0700.HK ), Baidu Inc and Huawei Technologies Co Ltd . [RIC:RIC:HWT.UL].

Nvidia also said Wednesday that the move could disrupt development of its flagship H100 chip, which is expected to ship later this year.

On Thursday, it announced that the US government has allowed the export and technology transfer necessary to complete the development of the H100 chip. US officials have also authorized the company to carry out exports necessary to support US customers of the A100 through March 1, 2023.

The company has also been allowed to fulfill orders for the chips through the Hong Kong facility through September 1, 2023. (https://bit.ly/3Q5YfhR)

Chinese customers are still required to obtain licenses from the US government for the technology, an Nvidia spokesperson said.

AMD did not respond to a request for comment on whether it received a similar authorization.

Reporting by Akash Sriram, Yuvraj Malik and Tiyashi Datta in Bengaluru, Additional reporting by Noel Randewich, Writing by Ankur Banerjee; Editing by Aditya Soni

Our standards: Thomson Reuters Trust Principles.