What's Going On With Chip Stocks Nvidia and AMD Wednesday

Nvidia Corp NVDA, Advanced Micro Devices, Inc AMD, and a host of peer chipmakers are trading lower Wednesday amid reports of the U.S. adopting a stricter stance over China's AI ambitions.

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.

The chipmaking sector is trading lower Wednesday with the ones including Nvidia, AMD,  Broadcom Inc AVGO, Texas Instruments Inc TXN, Analog Devices, Inc ADI, Marvell Technology, Inc MRVL, ON Semiconductor Corp ON are trading lower between 3%-4%.

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 SMH and IShares Semiconductor ETF 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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