Shares in major computer chip makers fell sharply early Wednesday after Nvidia warned that new U.S. government restrictions on AI chip exports could cost the company an additional $5.5 billion in revenue.
Nvidia revealed that Washington has imposed indefinite licensing requirements on its H20 chips and similar products due to concerns they could be used in Chinese supercomputers. The company disclosed the move in a regulatory filing, saying the U.S. government sees risks of these chips being diverted to China for advanced AI and supercomputing applications.
The market responded swiftly. Nvidia’s stock dropped 5.8% in pre-market trading, while rival AMD saw a 6.5% decline. Asian chip-related firms also took a hit: Japan’s Advantest lost 6.7%, Disco Corp. fell 7.6%, and Taiwan Semiconductor Manufacturing Co. (TSMC) was down 2.4%.
The latest export controls follow a letter from Senator Elizabeth Warren to Commerce Secretary Howard Lutnick, urging stronger action to block shipments of high-powered AI chips, including Nvidia’s H20, to China. Warren criticized the Commerce Department for initially holding off on restricting the H20 chips, which were not included in earlier Biden administration controls.
Concerns over China’s AI ambitions were reignited earlier this year with the release of DeepSeek, a Chinese AI chatbot. U.S. officials worry that such technologies could benefit from advanced American chips.
In an effort to boost domestic production, Nvidia announced plans on Monday to build its AI supercomputers and Blackwell chips in the U.S. for the first time. The company said it has secured over one million square feet of space in Arizona and Texas for chip manufacturing and testing — part of a major investment expected to deliver $500 billion worth of AI infrastructure over four years.
Former President Donald Trump praised Nvidia’s move as a success for his push to bring high-tech manufacturing back to the U.S. He also indicated that tariff exemptions for electronics like smartphones and laptops are temporary, with a new, targeted tariff policy for semiconductors in the works.
Commerce Department officials have yet to comment on the new controls.