US Imposes Stricter Controls on AI Chip Exports
BANGKOK (AP) — The US government has imposed stricter controls on exports of computer chips used for artificial intelligence, citing risks that the products 'may be used in or diverted to' a supercomputer in China. Nvidia, a leading computer chip maker, saw its shares plummet by 5.8% in pre-market trading.
The company, which announced Monday that it will produce its artificial intelligence super computers in the United States for the first time, said the government told it that its H20 integrated circuits and others of a similar bandwidth would be subject to licensing requirements for the "indefinite future."
Nvidia's announcement came after Sen. Elizabeth Warren urged Commerce Secretary Howard Lutnick to impose restrictions on exports of Nvidia's H20 and other advanced AI chips to China, citing concerns over how China might use the advanced chips to help develop its own AI capabilities.
Tighter Controls Spark Market Reaction
The news sparked a significant market reaction, with rival chip maker AMD dropping 6.5% and Asian technology giants also seeing big declines. Testing equipment maker Advantest's shares fell 6.7% in Tokyo, while Disco Corp lost 7.6%. Taiwan's TSMC dropped 2.4%.
Shares of chip makers plummeted after Nvidia said the tighter controls would cost it an extra $5.5 billion. The company had announced Monday that it will produce its artificial intelligence super computers in the United States for the first time, a move seen as a boost to US manufacturing.
Nvidia's Response and Market Impact
Nvidia said the government told it that its H20 integrated circuits and others of a similar bandwidth would be subject to licensing requirements for the "indefinite future." The company's shares fell by 5.8% in pre-market trading, while AMD dropped 6.5%. Testing equipment maker Advantest's shares fell 6.7% in Tokyo.
Nvidia said it has commissioned more than one million square feet of manufacturing space to build and test its specialized Blackwell chips in Arizona and AI supercomputers in Texas — part of an investment the company said will produce up to half a trillion dollars of AI infrastructure in the next four years.
Background on US-China Relations
The emergence of China's DeepSeek AI chatbot in January renewed concerns over how China might use advanced chips to help develop its own AI capabilities. Former President Joe Biden had not included the H20 chips in controls his administration placed on exports of advanced AI chips.
Sen. Elizabeth Warren wrote a letter to Commerce Secretary Howard Lutnick urging him to impose restrictions on exports of Nvidia's H20 and other advanced AI chips to China, citing concerns over how China might use these chips to help develop its own AI capabilities.
No Comment from Commerce Department
Commerce Department officials were not immediately available for comment early Wednesday. The news of the new controls came after President Donald Trump claimed Nvidia's decision as a victory for his effort to expand manufacturing in the US.
The announcement by Nvidia came after President Donald Trump and other officials said tariff exemptions on electronics like smartphones and laptops were only a temporary reprieve until officials develop a new tariff approach specific to the semiconductor industry.
Conclusion
The tighter controls imposed by the US government have sparked significant market reaction, with shares in chip makers plummeting. The move is seen as an attempt to restrict China's access to advanced AI technology and limit its ability to develop its own capabilities.
Nvidia's response has been swift, with the company commissioning more than one million square feet of manufacturing space to build and test its specialized Blackwell chips in Arizona and AI supercomputers in Texas. The move is part of an investment the company said will produce up to half a trillion dollars of AI infrastructure in the next four years.
The impact of these controls on US-China relations remains uncertain, but one thing is clear: the stakes are high, and the implications for global trade and technology policy could be far-reaching.