Chip stocks tumble after US bans Nvidia sales to China

Semiconductor stocks slipped on Tuesday after the US announced sweeping updates to export curbs designed to block China’s access to advanced computer chips, changes that will restrict the sale of semiconductors that Nvidia Corp. designed specifically for the Chinese market.

The PHLX Semiconductor Sector index, a gauge comprised of 30 chip stocks, was on track to erase about $73 billion in combined market value.

The latest curbs target Nvidia’s A800 and H800 chips, a senior US official said. The new rules also require companies to notify the US government before selling chips that fall below the controlled threshold, as Bloomberg reported earlier. Top-of-the-line chips are best for powering artificial intelligence models, but a class of slightly inferior chips could also be used for AI and super computing and also pose a risk, a senior administration official said.

A spokesperson for Nvidia said the company complies with all applicable regulations while serving its customers, and given worldwide demand for its products, it doesn’t anticipate much of an impact on its results.

An analyst for Bloomberg Intelligence said these updates to rules were expected, but added that Nvidia could see an impact in the future.

“Though the restrictions won’t greatly affect short-term estimates, they can erode Nvidia’s long-term prospects,” said BI’s Kunjan Sobhani. “A recent surge in orders from large Chinese customers indicates stockpiling of 800-series chips in anticipation of such restrictions, pulling sales forward.”

Nvidia shares fell as much as 7.8% on Tuesday, their biggest intraday fall since December. Bloomberg