Semiconductor stocks Nvidia and Advanced Micro Devices fell Wednesday on worries over tougher U.S. restrictions on artificial intelligence technology exported to China. NVDA stock ended the trading day down even though its chief financial officer aimed to ease concerns at a Piper Sandler financial conference.
The Biden administration is weighing tougher restrictions on exports of computer chips that process AI software, the Wall Street Journal reported late Tuesday. The new restrictions would also apply to Nvidia's less powerful A800 AI chips, which were designed to avoid export curbs.
Speaking at the Piper Sandler financial conference, Nvidia CFO Colette Kress said: "Given the strength of our demand for our products worldwide, we do not anticipate that such additional restrictions, if adopted, would have an immediate material impact on our financial results."
According to a FactSet transcript of the event, Kress added: "Over the long-term, restrictions prohibiting the sale of our data center (products) to China, if implemented, will result in a permanent loss of opportunities for the U.S. industry to compete and lead in one of the world's largest markets."
NVDA Stock: 10% Of Revenue From China
Analysts estimate that Nvidia gets about 10% of its revenue from China.
"The U.S. Commerce Department could move as soon as July to stop shipments of chips made by NVDA and others to customers in China without first obtaining a license," Jefferies analyst Mark Lipacis said in a note to clients.
He added: "We believe a sudden drop in shipments to China due to further government restrictions would get absorbed by demand from non-China hyperscalers (internet data center operators) and enterprises."
Nvidia is the leading supplier of AI chips used in data centers. AMD and Broadcom also make AI chips. While NVDA stock faces the most headwinds amid U.S.-China friction over AI chips, shares in Micron Technology also dipped on the news.
Semiconductor Stocks Tumble
On the stock market today, NVDA stock fell 1.8% to close at 411.17. AMD stock dipped 0.2% to 110.19, clawing back from a bigger loss. Broadcom stock edged down a fraction to 847.94.
Shares in memory chip maker Micron rose 0.4% to 67.07. Earnings for Micron stock are due after the market close today.
In addition, Micron makes DRAM and Nand memory chips and competes with South Korea's Samsung Electronics and SK Hynix as well as Japan's Kioxia.
China's semiconductor industry aims to develop its own AI chips. But Chinese companies face software and manufacturing hurdles, analysts say. Nvidia provides application development software along with its AI chips.
A top performer among semiconductor stocks, NVDA stock has surged 184% in 2023.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
