Nvidia (NVDA) shares fell on Friday along with other chipmakers after a December jobs report beat expectations for additional rate cuts by the Federal Reserve and ahead of expected chip export restrictions. by the Biden administration.
Nvidia shares fell 3%, while its peer AMD (AMD) fell 4.8% and the PHLX Semiconductor Index (^SOX) fell more than 2.4%.
Closing: January 10 at 4:00:01 pm EST
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The Biden administration is rushing to publish new rules limiting exports of AI chips used in data centers by certain companies to certain countries, Bloomberg reported Wednesday, an attempt to curb the development of artificial intelligence in countries adversaries of the United States like Russia and China.
According to DA Davidson analyst Gil Luria, up to 40% of Nvidia chips end up in China.
China does not have access to advanced chip manufacturing technology (called EUV lithography), which is essential to the country’s ability to produce AI chips domestically.
“While there have already been some restrictions on chip sales, there have been reports of advanced NVIDIA chips coming to China, likely due to the fact that NVIDIA has limited control over its resellers,” Luria told Yahoo Finance in a email. “If the United States requires NVIDIA to take responsibility for where its chips are ultimately used, this would put much of this revenue at risk.”
Nvidia’s vice president of global affairs, Ned Finkle, said in a statement shared with Yahoo Finance on Friday that the restrictions would “harm the American economy, set the United States back, and play into the hands of American adversaries.”
“This last-minute policy by the Biden administration would be a legacy that will be criticized by American industry and the global community,” he added.
DA Davidson’s Luria said Nvidia’s vocal opposition to Biden’s upcoming export restrictions is “making investors even more comfortable.” [more] concerned about the impact of the new rules” on Friday.
Technology policy think tank Information Technology & Innovation Foundation echoed Nvidia’s concerns about the upcoming rules, stating that “placing limits on US exports of AI GPUs will limit market opportunities for US companies and, at “At the same time, it will provide an open door for foreign AI chip suppliers.”
“[While] “The challenge of such advanced chips reaching US competitors via third countries is quite real, the proposed framework does not specifically address the core challenge and would have potentially catastrophic consequences for US digital industry leadership,” Stephen said. Ezell, vice president of global innovation policy at the foundation.
Nvidia’s drop on Friday comes after a volatile week for the stock as investors digested the company’s announcements during the tech industry’s annual CES trade show. After hitting a record closing price on Monday, the chipmaker’s shares fell more than 6% on Tuesday before extending their decline through the end of the week.