Nvidia shares (NVDA) fell as much as 3% early Monday after the Biden administration published an updated export rule aimed at controlling the flow of artificial intelligence chips to “adversaries” like China.
The White House said the rule would limit to 50,000 the number of AI chips called GPUs (graphics processing units) that can be ordered by most countries without a special license. Small orders of 1,700 GPUs or less would not count toward the export cap. Some 18 US allies, including the UK, the Netherlands and Taiwan, will face no restrictions.
At 12:13:14 p.m. EST. Open market.
“The United States must act decisively to lead this transition by ensuring that American technology underpins the global use of AI and that adversaries cannot easily abuse advanced AI,” it said Monday the White House in a press release.
For reference, Microsoft (MSFT) alone would have purchased 485,000 GPU Hopper from Nvidia in 2024, while Meta (META) purchased 224,000 AI chips, according to the Financial Times.
The rule aims to close loopholes in previous AI chip export restrictions in 2022 and 2023 “by thwarting contraband” and “elevating AI safety standards,” the White House said.
“These restrictions will make it even more difficult for Chinese entities to purchase the most advanced NVIDIA chips,” Gil Luria, an analyst at DA Davidson, told Yahoo Finance in an email Monday.
“Although there have already been some restrictions on chip sales, there have been reports of advanced NVIDIA chips arriving in Chinalikely due to the fact that NVIDIA has limited control over its resellers,” Luria explained in an earlier email last week.
In addition to Nvidia’s advanced chips sold through resellers, Nvidia manufactures specific versions of chips that comply with current U.S. trade restrictions on China. According to the FT, Nvidia’s H20 chips – its Hopper chips for China – would not be subject to the new rule.
Nvidia’s vice president of government affairs, Ned Finkle, said in a statement Monday that the rule was “drafted in secret and without proper legislative review.”
“And by attempting to rig market outcomes and stifle competition – the lifeblood of innovation – the Biden administration’s new rule threatens to squander America’s hard-won technological advantage,” he said. he declared.
Companies have a longer than usual 120 day period to provide feedback on restrictionsBloomberg reported, giving the Trump administration time to make changes to the rule, which is expected to take effect in a year. Nvidia’s statement included an apparent appeal to the new administration.
“As the first Trump administration demonstrated, America wins through innovation, competition and sharing its technologies with the world, not by hiding behind a wall of government overreach,” Finkle said . “We look forward to a return to policies that strengthen American leadership, support our economy, and preserve our competitive advantage in AI and beyond.”
