Shares in computer chipmakers took a hit on Wednesday after Nvidia announced new U.S. government export controls on crucial AI chips. This decision could cost Nvidia an extra $5.5 billion. The company mentioned that it will now manufacture its AI supercomputers in the U.S. for the first time.
In a recent regulatory filing, Nvidia revealed that the government has imposed licensing requirements on its H20 chips and similar products for an “indefinite future.” The reasoning? Concerns that these chips could be used to power supercomputers in China.
Following the announcement, Nvidia’s stock, along with that of rival Advanced Micro Devices (AMD), each dropped around 6% in morning trading. In a regulatory filing, AMD estimated potential costs of around $800 million due to these export restrictions on its MI308 chips and inventory adjustments.
The U.S. Commerce Department stood firmly behind the new export licensing, asserting its commitment to protecting national and economic security. The department’s statement covered Nvidia’s H20 and AMD’s MI308 chips as part of the export controls.
Asian tech shares also felt the impact. Companies like Advantest, Disco Corp., and Taiwan’s TSMC saw noticeable declines in their stock prices, indicating widespread concern in the tech sector.
This export clampdown comes after Senator Elizabeth Warren voiced her concerns. She urged the Commerce Secretary to limit the export of advanced AI chips to China, highlighting fears that such technology could bolster China’s AI capabilities. Warren pointed out that former President Biden initially left the H20 chips out of his export restrictions, stirring up additional scrutiny.
The competitive landscape in AI has dramatically shifted, especially with China unveiling its DeepSeek AI chatbot in January. This event raised alarms over how China could leverage advanced chips in developing its AI sector.
In a bold move, Nvidia announced plans to build over a million square feet of manufacturing facilities in Arizona and Texas for its specialized Blackwell chips and AI supercomputers. This investment aims to contribute significantly to U.S. AI infrastructure, with projections of up to $500 billion over the next four years.
Interestingly, former President Trump previously suggested tariff exemptions on electronics were temporary. He touted Nvidia’s manufacturing decision as a win for his economic agenda aimed at boosting U.S. production.
In conclusion, the intersection of government policy and tech innovation is becoming increasingly complex. As expert opinions suggest, such export controls may reshape the competitive landscape in AI, with lasting implications for both U.S. tech firms and global rivals. For further details on these developments, you can check relevant reports from sources like the U.S. Commerce Department.
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