Nvidia falls on the stock market after the restriction of exports to China

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nvidia falls on the stock market after the restriction of.jpg
nvidia falls on the stock market after the restriction of.jpg

The US government has imposed new restrictions on the export to China of computer chips used for research on artificial intelligence, citing possible military applications of this technology.

Nvidia A100
Nvidia A100 – Credit: Nvidia

Nvidia and AMD have been ordered by the US government to restrict sales of its chips dedicated to artificial intelligence in Chinathereby disrupting an activity whose chip designer expected it to generate about $400 million in revenue this quarter, the company said in a regulatory filing on Wednesday. These restrictions come shortly after Taiwan banned the sale of processors with a frequency above 25 MHz in Russia.

These announcements did not fail to shake Nvidia on the stock market, since the company lost more than 10% of its value in just a few hourst. It couldn’t come at a worse time for Nvidia, as its sales for the fiscal third quarter had already seen a significant slowdown due to the limited availability of its graphics cards. We also recall that since mid-August, the company has lost nearly a quarter of its stock market value.

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US limits chip exports to China

These bans were enacted by the US government to prevent companies’ high-performance GPUs from being used by the military in China or Russia. Obviously, China is not happy with these restrictions, which it considers part of a “technological blockade”.

Nvidia says the new export controls aren’t aimed at the specific chips themselves, but at performance thresholds that are narrowly associated with Nvidia A100 and H100 processors, the current generation of chips. On the AMD side, it is its MI250 chip which is affected by these new restrictions.

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Whether these restrictions will have any effect on China’s AI capabilities in the long term remains to be seen, as Chinese companies have started developing their own GPUs. To make matters worse, Nvidia manufactures the A100 in Taiwan, a current geopolitical hotspot between the United States and China. Moreover, if a war were to break out, it is likely that we would face a new worldwide shortage of chips.