The White House on Monday declared new limitations on the export of artificial intelligence chips. This move is set to impact major tech companies, including Nvidia NVDA and Advanced Micro Devices AMD.
What Happened: Following the announcement, Nvidia’s shares experienced a 3% drop, while AMD’s stock saw a 2% dip in premarket trade, according to data from Benzinga Pro.
The interim final rule on artificial intelligence technology will impose restrictions on chip orders for most nations, according to the White House. However, 18 key allies and trusted partners will be exempted from these limitations. Countries that meet stringent security and trust criteria may apply for elevated privileges, while others will be capped at acquiring up to 50,000 advanced GPUs per country, as outlined in a White House fact sheet.
The Semiconductor Industry Association, representing major players like Nvidia and AMD, according to MarketWatch, has raised significant objections to the newly announced regulations. The group criticized the lack of industry consultation during the rule-making process and warned of severe consequences for U.S. leadership and global competitiveness in the semiconductor sector.
Oracle’s Executive Vice President, Ken Glueck, cautioned that the regulations could shrink the international chip market for U.S. companies by as much as 80%. He also noted that the rules, set to take effect 60 days after their publication, could have a profound impact on the U.S. cloud industry.
Meanwhile, last week, Nvidia had expressed strong disapproval of the Biden administration’s anticipated chip export restrictions, arguing that they would not bolster national security but instead push the world towards alternative technologies. “This last-minute Biden administration policy would be a legacy that will be criticized by U.S. industry and the global community,” Ned Finkle, Nvidia’s vice president of government affairs, said.
In December, the U.S. blacklisted 140 Chinese entities and restricted exports of memory chips vital to artificial intelligence. Beijing had also retaliated with export bans and reviews for U.S.-bound shipments of these minerals.
In late December, the Biden-led administration also launched a trade investigation into Chinese-produced "legacy" semiconductors. The "Section 301" investigation is slated to transition to the incoming administration of President-elect Donald Trump for completion. This could provide Trump with a chance to enforce the hefty 60% tariffs he has previously threatened on Chinese imports.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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