Nvidia hit as China cut off from more advanced chips

Two Nvidia chips that were specifically designed for China are among the cutting-edge chips that the Biden administration has stated will no longer be exported to China.

The curbs also impacted Advanced Micro Devices and Intel, causing US chip stocks to plummet.

The goal of the restrictions is to close any gaps that emerged after the US declared last October that it would be restricting chip exports.

They are intended to stop China’s military from bringing in cutting-edge gear or chips.

The A800 and H800, two premium AI chips Nvidia developed for the Chinese market, will no longer be able to be sold, the company said in a filing. It stated the blocking would also apply to one of its gaming chips.

Analysts predict Nvidia will be most severely impacted because up to 25% of its revenue from sales of data centre chips comes from China, even if the restrictions also affect other chip manufacturers. Following the news, Nvidia’s shares—which are regarded as star stock—dropped as much as 4.7%.

The new regulations are “overly broad” and “risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere,” according to a statement from the Semiconductor Industry Association, which, by revenue, represents 99% of the US semiconductor industry.

The Chinese embassy also issued a statement stating that it “firmly opposes” the new restrictions, which also target Russia and Iran and take effect in 30 days.

China responded two months ago by limiting exports of two essential minerals for the semiconductor industry: gallium and germanium.

China holds a dominant position in the global gallium and germanium supply chain. 60% of the world’s germanium and 80% of the world’s gallium are produced there, according to the industry group Critical Raw Materials Alliance (CRMA).

The materials are classified as “minor metals,” which means that they are frequently byproducts of other processes rather than being found naturally on their own.

In addition to the US, China is also subject to export restrictions on chip technology from Japan and the Netherlands, which is home to important chip equipment manufacturer ASML.

As governments stockpile essential minerals to exert influence over other nations, a phenomenon known as “resource nationalism” is on the rise, which has sparked worries due to the ongoing competition between the two largest economies in the world.

Credits: BBC

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