The U.S. plans to update export controls on AI chips to limit China's access to advanced technologies with military applications.

The strong demand in China for advanced chips used on AI projects has bred a growing market for smuggled Nvidia GPUs, despite the U.S. ban.

Sourcing smuggled GPUs has become a big moneymaking enterprise due to the robust domestic demand for Nvidia's A100 and H100 GPUs.

Earlier, Nvidia chief Jensen Huang had flagged immense damage to U.S. tech from its semiconductor chip embargo with China.

Semiconductor ETFs VanEck Semiconductor ETF (NASDAQ:SMH) and IShares Semiconductor ETF (NASDAQ:SOXX) are trading lower by approximately 2%.

Price Action: NVDA shares traded lower by 3.31% at $404.88 premarket on the last check Wednesday.

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