US Tightens Chip Export Rules to China

Nvidia expects a $5.5bn hit after the US government tightened export rules to China, requiring licences to export its H20 AI chip. The chip maker's shares plunged almost 6% in after-hours trading. The rules are part of an escalating trade war between the US and China, with both countries introducing steep trade tariffs on each other. Analysts said Nvidia can bear the costs, but some expect exemptions or changes to tariff policy in the near future.

Nvidia will take a $5.5 billion financial hit after the US government placed fresh restrictions on the export of its H20 artificial intelligence chips to China. The H20 chip was designed to comply with previous US export controls, but new rules require a special license for its export to China, which accounted for 13% of Nvidia's sales last year. The restrictions are part of the escalating US-China trade war, with the US seeking to block China's use of American technology to advance its military and AI systems. Nvidia's stock slumped 6.87% after the announcement, and analysts say the restrictions mark a "strategic blow" for Nvidia's efforts to engage with Chinese customers. The US Commerce Department confirmed the new export licensing requirements, citing the need to safeguard national and economic security.

Asian stocks fell on Wednesday as tech shares declined after Nvidia announced that the US government would restrict sales of some of its AI chips to China, potentially impacting its business. Nvidia's stock dropped 6% in after-hours trading, and the company's regulatory filing indicated a $5.5 billion hit due to lost sales. Benchmarks in Japan and China fell around 1%, while shares in Hong Kong and Taiwan dropped 2.5% and nearly 2%, respectively. US S&P 500 futures were also down 1%. The news is the latest development in the US-China trade tensions under President Trump's administration, which has been marked by whipsawing tariff policies and export restrictions.

The US and China are engaged in a trade war that is affecting Taiwan's chip industry, which both countries rely heavily on. The US is considering tariffs on chip imports, while China is exempting advanced chips made in Taiwan from its tariffs on US goods. This move by China undermines the US effort to revive its chip-making industry and could benefit China's own chip makers. The global chip supply chain is complex, involving multiple countries, making it logistically complicated to impose tariffs. The US and China's actions threaten to make chips and consumer electronics more expensive, with analysts warning that the trade war could have significant consequences for the industry.