Nvidia stock falls after U.S. government restricts chip sales to China

Nvidia shares fell 6.5% in extended trading on Wednesday after the company said the US government was restricting sales in China.

In a filing with the SEC, Nvidia said the US government notified the company on August 26 of a new license requirement for future exports to China, including Hong Kong, to reduce the risk of the products being used by the Chinese military.

Nvidia said the restriction would affect the A100 and H100 products, which are GPUs sold to businesses.

“The license requirement also includes any future Nvidia integrated circuit achieving both peak performance and chip-chip I/O performance at or above thresholds roughly equivalent to the A100, and any system that includes these schemes,” the filing said.

The company expects it could lose $400 million in potential sales in China in the current quarter, after previously forecasting revenue of $5.9 billion. The new rule also applies to sales in Russia, but Nvidia said it has no paying customers there.

In recent years, the U.S. government has imposed increasing restrictions on the export of chips made with American technology over concerns that Chinese companies could use them for military purposes or steal trade secrets.

Nvidia said it is applying for a license to continue some Chinese exports, but does not know if the US government will grant an exception.

“We are working with our customers in China to satisfy their planned or future purchases with alternative products and may seek licenses when replacement is not sufficient,” an Nvidia spokesperson told CNBC. “The only current products subject to the new license requirement are the A100, H100 and systems such as the DGX that incorporate them.”

An AMD representative confirmed to CNBC that it has also received new licensing requirements from the US Department of Commerce, which it says apply to its MI250 chip, which is designed for artificial intelligence. AMD said it does not believe the new requirements will have a material impact on its business.

In a statement to CNBC, a spokesperson for the department said: “While we are unable to outline specific policy changes at this time, we are taking a comprehensive approach to implement the necessary additional technology, end-use and end-user actions to protect the national security and foreign policy interests of the United States.”

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