The U.S. is set to impose even stricter regulations on the export of American chip technology to China. The U.S. is also limiting the sale of semiconductors specifically designed for the Chinese market.

Amid the competition for the advancement of artificial intelligence (AI), the U.S. has tightened its restrictions on chip deliveries to China. Nvidia’s H800 and A800 chips, from the Californian semiconductor group, are expected to be particularly affected by the new regulations. Nvidia’s technology plays a pivotal role in the learning of AI systems globally.

Orders Exceeding $5 Billion

The previous phase of U.S. export restrictions had already halted the sale of Nvidia’s H100 and A100 chip systems to China. These chips are used by major Western companies to develop their AI software, such as the chatbot ChatGPT. Nvidia quickly developed the lighter versions, H800 and A800, which were below the prohibition threshold since they exchange data slower than the top-tier models.

The new export restrictions are expected to significantly impact Nvidia’s operations. Based on earlier data, Nvidia received orders worth around five billion dollars for these chip systems. It remains unclear how many of these orders can be fulfilled before the new U.S. restrictions take effect. Nvidia’s stock price dropped nearly five percent following the announcement of the new export rules.

China Aims to Develop Its Own Technology

Through these trade restrictions, the U.S. government aims to prevent China from accessing cutting-edge American technology for military use. Consequently, China is pushing to develop its own chip technology and has recently showcased some advancements. This progress is one of the reasons why a tightening of U.S. measures was anticipated.

Meanwhile, warnings have been issued in recent months by the U.S. chip sector. They suggest that overly stringent restrictions could harm the operations of American companies like Nvidia. Yesterday, stock prices for chip suppliers like Intel and AMD also saw a decline.