Why KLA Corporation Stock Is Trading Lower

KLA Corp KLAC shares are trading lower by 1.7% to $483.03 Tuesday afternoon. Semiconductor stocks are declining during Tuesday's session as the Biden administration announced a decision to cease the shipment of advanced AI chips to China.

What Happened?

Per Reuters, new U.S. regulations are designed to prevent China, Iran and Russia from using American AI technology for military purposes. These rules restrict chip exports and blacklist two Chinese chip makers.

The aim is to limit China's military technology access without harming its economy, according to Commerce Department Secretary Gina Raimondo.

See Also: Nvidia Eyes Worst Day In 2023

Why This Matters To KLA Corporation

As the new regulations restrict chip exports, KLA Corporation, which is involved in the semiconductor industry, might face reduced demand for its products from international customers, especially those in China and potentially other affected countries.

This reduction in exports could lead to a decline in revenue and, consequently, negatively impact the company's stock price.

These regulations may disrupt global semiconductor supply chains. KLA Corporation might face challenges in sourcing raw materials or components from countries affected by the regulations or in exporting its products to these regions.

Supply chain disruptions can additionally lead to increased costs and operational challenges.

According to data from Benzinga Pro, KLAC has a 52-week high of $520.19 and a 52-week low of $262.59.