Nvidia Stock Takes a Hit as Biden Administration Targets Chin...

14 Eki 2023

Nvidia Stock Takes a Hit as Biden Administration Targets Chinese Access to AI Chips

Nvidia Corporation, a renowned fabless designer of graphics processing units (GPUs), witnessed a 3% dip in its stock price on Friday in response to actions taken by the Biden administration to restrict Chinese access to state-of-the-art computer chips used for artificial intelligence (AI). Specifically, Nvidia's H100 Tensor Core GPU is expected to be affected by these new regulations.

Nvidia's stock movement ran counter to the Dow Jones, which experienced gains attributed to robust earnings results from JPMorgan, Citigroup, and Wells Fargo, outperforming Wall Street consensus. Meanwhile, the NASDAQ Composite and the S&P 500 seemed unaffected by the banks' success and moved in the opposite direction.

Nvidia's Stock and Chinese AI Chip Bans:
Last autumn, the Biden administration initiated a ban on the export of Nvidia's H100 and A100 GPUs to mainland China, both of which play pivotal roles in generative AI and military applications. Advanced Micro Devices' MI250 accelerator chip was also impacted by this ban. At the time, Nvidia estimated that the new regulations could result in up to $400 million in lost sales.

However, recent reports by Reuters reveal that the administration has identified mainland companies accessing AI chips via a loophole that allows overseas units of Chinese corporations to continue procuring these products. These foreign subsidiaries either illicitly transport the chips to the mainland or facilitate remote access to the chip technology, despite operating far outside China's borders.

According to Reuters: "[T]he very chips barred by US regulations could be purchased from vendors in the famed Huaqiangbei electronics area in the southern Chinese city of Shenzhen."

Complete Restriction Challenges:
It remains uncertain how Washington can effectively block China from accessing AI technology. Chinese corporations are already finding ways to access this technology through third-party channels, including Amazon Web Services, which employs these chips in its cutting-edge data centers.

As of the time of writing, Nvidia's stock has decreased by 0.8%, trading at $465 per share. However, investors need not be overly concerned. Nvidia's stock has been on an upward trajectory since it hit a low of just below $410 on September 21. This steady ascent, spanning over three and a half weeks, shows no immediate signs of slowing down.

Nvidia continues to navigate the complex terrain of international regulations and the ever-evolving tech industry, making it a company to watch closely in the coming months.