Nvidia stock (NVDA) fell as much as 3% early Monday after the Biden administration released an updated export rule aimed toward controlling the flow of artificial intelligence chips to “adversaries” similar to China.
The White House said the rule would cap the variety of AI chips called GPUs (graphics processing units) that may be ordered by most countries with no special license to 50,000. Smaller orders of 1,700 or fewer GPUs wouldn’t count toward the export cap. Some 18 US allies, including the UK, Netherlands, and Taiwan, will face no restrictions.
As of 12:07:07 PM EST. Market Open.
“America must act decisively to guide this transition by ensuring that US technology undergirds global AI use and that adversaries cannot easily abuse advanced AI,” the White House said in a press release Monday.
For reference, Microsoft (MSFT) alone reportedly purchased 485,000 of Nvidia’s Hopper GPUs in 2024, while Meta (META) purchased 224,000 of the AI chips, in keeping with The Financial Times.
The rule goals to shut loopholes in prior export restrictions on AI chips in 2022 and 2023 “by thwarting smuggling” and “raising AI security standards,” the White House said.
“These restriction will make it even harder for Chinese entities to buy essentially the most advanced NVIDIA chips,” DA Davidson analyst Gil Luria told Yahoo Finance in an email Monday.
“While there have been some restrictions on chip sales already, there have been reports of advanced NVIDIA chips making it to China, likely on account of the incontrovertible fact that NVIDIA has limited control over its resellers,” Luria explained in a previous email last week.
Along with Nvidia’s advanced chips sold through resellers, Nvidia makes specific versions of chips that comply with current US trade restrictions on China. In accordance with the FT, Nvidia’s H20 chips — its Hopper chips for China — wouldn’t be subject to the brand new rule.
Nvidia vice chairman of presidency affairs Ned Finkle said in a press release Monday that the rule was “drafted in secret and without proper legislative review.”
“And by attempting to rig market outcomes and stifle competition — the lifeblood of innovation — the Biden administration’s latest rule threatens to squander America’s hard-won technological advantage,” he said.
Corporations have a longer-than-typical 120-day period to supply commentary on the restrictions, Bloomberg reported, giving the Trump administration time to make changes to the rule, which is ready to enter effect in a single yr. Nvidia’s statement included a seeming appeal to the incoming administration.
“As the primary Trump Administration demonstrated, America wins through innovation, competition and by sharing our technologies with the world — not by retreating behind a wall of presidency overreach,” Finkle said. “We sit up for a return to policies that strengthen American leadership, bolster our economy and preserve our competitive edge in AI and beyond.”
