NVIDIA Corp. NVDA stock traded down nearly 5% on Tuesday afternoon following news the U.S. is implementing new restrictions on artificial intelligence exports to China.
Under older restrictions, Nvidia was allowed to export slowed-down versions of its H800 and A800 chips to China, but now the company will no longer be able to sell them to China.
Chip Wars: The regulations are part of the Biden administration’s efforts to slow down China’s development of artificial intelligence technologies that U.S. officials worry China will use for military purposes.
Nvidia’s stock has been one of the big winners of 2023, up more than 200% YTD despite the recent dip. Other chip stocks like Broadcom Inc AVGO, Intel Corporation INTC, Marvell Technology Inc MRVL also traded lower Tuesday on fears that the new U.S. regulations will impact exports.
Growing Tensions: This latest announcement was the latest development in growing economic tensions between China and U.S.
The Biden administration maintained the Trump administration’s tariffs and other tough measures on China, and part of Biden’s economic policy has been to invest in infrastructure in the U.S. in an effort to compete with China.
Last year, then Speaker of the House Nancy Pelosi visited Taiwan to demonstrate the U.S.’s support for the island, upsetting many top Chinese officials. As a result, China withdrew from climate change talks with the U.S.
The latest restriction on AI chip exports likely signaled that trade relations between the U.S. and China aren’t getting better anytime soon.
The KraneShares CSI China Internet ETF KWEB, which tracks many large Chinese internet and technology companies, is down nearly 15% YTD.
Read Next: Nvidia Eyes Worst Day In 2023: Stock Falls Below 50-Day Average Amid China Chip Export Crackdown
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