Chip Stocks Are Facing Selling Pressure Wednesday: Here's Why

Chip stocks are sliding Wednesday after NVIDIA Corp NVDA announced that the U.S. government will start requiring a license to export chips to China.

What Happened: In a regulatory filing late Tuesday, Nvidia said the U.S. government contacted the company on April 9, informing the chipmaker that it will need a license to sell H20 chips to China.

The filing also states that a license will be required for any other circuits achieving the H20’s memory bandwidth, interconnect bandwidth, or a combination thereof.

Nvidia shares tumbled on the news, dragging down several other chip stocks with it. The VanEck Semiconductor ETF SMH was down about 3.75% at the time of writing Wednesday morning, according to Benzinga Pro.

Here’s a look at some of the semiconductor names moving lower on Wednesday:

• Advanced Micro Devices, Inc AMD

• ASML Holding N.V. ASML

• Taiwan Semiconductor Manufacturing Co TSM

• Broadcom Inc AVGO

• QUALCOMM Inc QCOM

• Applied Materials Inc AMAT

• Intel Corp INTC

• Micron Technology Inc MU

The license requirement will be in effect for the indefinite future in an effort to address risks associated with the potential for China to use the products for a supercomputer.

As a result of the restrictions, Nvidia said it expects its first-quarter financial results to include up to $5.5 billion of charges associated with H20 products held in inventory.

AMD also said in a filing Wednesday morning that the new export controls on chips could result in charges of up to approximately $800 million related to inventory and purchase commitments.

ASML, the largest supplier of chipmaking equipment, reported first-quarter results before the market open on Wednesday. The company warned that tariffs have increased uncertainty surrounding the company’s outlook, which may be adding to the weakness across the board.

“Our conversations so far with customers support our expectation that 2025 and 2026 will be growth years. However, the recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while,” ASML CEO Christophe Fouquet said.

BofA Securities cut price targets on several semiconductor names Wednesday morning due to potential impacts of tariffs.

The new chip license requirement is the latest in an intensifying trade war with China. The Trump administration paused reciprocal tariffs for most countries last week, but ramped up tariffs on China. China responded with 125% retaliatory tariffs on American goods over the weekend.

Read Next:

• US Stock Futures, Nikkei Slip Amid Fresh Nvidia Headwinds: Dollar Continues To Lose Steam

Photo: AKOBCHUK V/Shutterstock.