Trump chip export restrictions deal blow to Nvidia and AMD
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Chips sector sentiment soured Wednesday amid signs that the semiconductor industry is facing further export restrictions on advanced AI products.
Why it matters: The global AI race is colliding with the trade war between the U.S. and China — and chip makers are caught in the middle.
Between the lines: Nvidia shares fell 6.9% Wednesday after the company warned it expects to take a $5.5 billion hit from "inventory, purchase commitments, and related reserves" connected with its H20 chips.
- Advanced Micro Devices (AMD) said it's facing similar charges of up of $800 million tied to its MI309 products due to new export restrictions, sending its stock down 7.4%.
- The sector is also awaiting word from Trump on chip tariffs.
Threat level: The U.S. government notified Nvidia on April 9 that it would require a license to export H20 chips "and any other circuits achieving the H20's memory bandwidth, interconnect bandwidth, or combination thereof," the company said in a public filing.
- "The disclosures from Nvidia and AMD serve as the first major warning signs that Trump's fierce battle with China could stifle growth for the critical components utilized in the world's largest tech innovations," CNBC reported. "The administration has made some exemptions for electronics, including semiconductors, but has warned that separate tariffs could come in the future."
By the numbers: About 13% of Nvidia's revenue comes from Chinese sources, according to CFRA Research.
- "We believe this setback could empower domestic China competitors, specifically Huawei, though any future U.S.-China trade negotiations could benefit multinational technology companies," writes CFRA Research analyst Angelo Zino.
- "Investors must have a true long-term approach given policy gyrations/uncertainty."
Zoom in: Dutch semiconductor equipment manufacturer ASML also warned Wednesday in a statement that "recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while."
- "Industry overhangs could persist until we get clarity on new sectoral tariff rates (next several weeks), China retaliation, US reciprocal tariffs and AI diffusion rules," Bank of America analyst Vivek Arya wrote Wednesday in a research note.
The bottom line: Geopolitical tension is casting a pall over AI chip demand.
