US Trade Controls on AI Chips to China Impact Major Tech Firms
San Francisco, Thursday, 17 April 2025.
New US restrictions on AI chip exports to China could cost Nvidia and AMD billions, heightening trade tensions and prompting concerns over China’s technological advancements.
Impact on Nvidia and AMD
The Trump administration’s expanded restrictions on AI chip exports to China are projected to significantly impact major U.S. technology firms, particularly Nvidia and AMD. Nvidia expects a financial hit of approximately $5.5 billion due to the new export controls, as the company’s H20 processor shipments to China have been halted [1][2]. Similarly, AMD anticipates a loss of up to $800 million as the company must also comply with the new restrictions and secure licenses for exporting its MI308 products to China [2]. These financial setbacks arise amidst a broader context of escalating trade tensions between the U.S. and China.
A Stricter Licensing Regime
In addition to direct financial impacts, the U.S. government has implemented a licensing requirement for the export of Nvidia’s H20 and AMD’s MI308 chips to maintain national security and limit technological proliferation in China [3]. U.S. officials fear that China’s advancements in artificial intelligence could pose a strategic threat, further complicating an already contentious trade relationship [4]. Licenses for exporting these chips are expected to be limited, and both Nvidia and AMD have expressed concerns over potential delays and denials [3].
Market Reaction and Stock Implications
The financial markets responded swiftly to these trade restrictions, with Nvidia’s stock plummeting nearly 7% following the announcement [5][6]. Analysts from Wall Street have revised their price targets for Nvidia, reflecting the anticipated revenue contraction, though some remain optimistic about the company’s capabilities in other markets [6]. AMD shares similarly saw a decline, falling approximately 7.4% after the restrictions became public [3]. These reactions underscore investor apprehension about the broader implications of prolonged trade disputes.
Geopolitical and Strategic Considerations
The newly imposed export controls reflect an intensification of U.S. strategies aimed at curbing China’s growing technological capabilities. The Biden-era framework, further reinforced under the current administration, underscores a continuity of policy aiming to limit China’s access to cutting-edge technologies [1][4]. However, with the Trump administration’s deadline on whether to implement an even more comprehensive semiconductor trade control looming on May 15, 2025, the international market remains on alert for further developments [1][2].