Nvidia (NVDA) stock fell along with other chip makers on Friday after the December jobs report raised expectations for further Federal Reserve interest rate cuts and ahead of expected chip export restrictions by the Biden administration.
Nvidia stock fell 3%, peer AMD (AMD) fell 4.8%, and the PHLX Semiconductor (^SOX) index fell more than 2.4%.
Ends: January 10th 4:00:01pm (EST)
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The Biden administration is rushing to announce new rules that would restrict the export of AI chips used by certain companies in data centers to certain countries, Bloomberg reported on Wednesday. This is an attempt to curb the development of artificial intelligence in US adversaries such as Russia and China.
According to DA Davidson analyst Gil Luria, 40% of NVIDIA chips end up in China.
China does not have access to advanced chip manufacturing technology (called EUV lithography) that is essential to its ability to domestically produce AI chips.
“Although there are already some restrictions on chip sales, there are reports that advanced NVIDIA chips are being distributed to China, likely due to NVIDIA’s limited control over resellers. ” Luria told Yahoo Finance in an email. “Much of this revenue would be at risk if the United States required NVIDIA to take responsibility for where its chips end up.”
Ned Finkle, Nvidia’s vice president of international affairs, said in a statement shared with Yahoo Finance on Friday that the restrictions would “negatively impact the U.S. economy, set us back, and play into the hands of our adversaries.” ” he said.
He added: “This last-minute Biden administration policy will be a legacy that will be criticized by U.S. industry and the international community.”
Luria, of the Davidson attorney’s office, said Friday that Nvidia’s vocal opposition to Biden’s future export restrictions has “made investors even (more) concerned about the impact of new rules.”
The Information Technology Innovation Foundation, a technology policy think tank, echoed NVIDIA’s concerns about the upcoming rules, saying, “Putting limits on U.S. AI GPU exports would limit market opportunities for U.S. companies while also limiting foreign AI chip suppliers.” “It will open the door to.”
“While the challenge of having such advanced chips reach U.S. competitors through third countries is very real, the proposed framework fails to address the core challenges in a targeted manner and “This could have devastating consequences for digital industry leadership,” he said. said Stephen Ezell, vice president of global innovation policy at the foundation.
Nvidia’s decline on Friday came after a volatile week for the stock as investors digested the company’s announcements at the tech industry’s annual trade show CES. After surging to a record close on Monday, the chipmaker’s stock fell more than 6% on Tuesday, and the decline widened into the end of the week.
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