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Equities

Semiconductor Export Restrictions Impact Nvidia and Intel Stocks

Nvidia's stock slightly up amid U.S. plans to tighten AI chip exports to China, sparking further U.S.-China tech tensions.

By Athena Xu

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4/1, 10:30 EDT
Apple Inc.
Advanced Micro Devices, Inc.
Broadcom Inc.
Intel Corporation
Meta Platforms, Inc.
Marvell Technology, Inc.
Micron Technology, Inc.
NVIDIA Corporation
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Key Takeaway

  • Nvidia's stock slightly rose by 0.2% to $905.63 amid broader market gains, despite looming U.S.-China tech tensions and new AI chip export restrictions.
  • The U.S. plans to tighten AI chip exports to China, affecting stocks like Nvidia and Intel; however, Nvidia sees no "near-term meaningful impact" on finances.
  • Despite regulatory challenges, U.S. tech firms like Apple and Meta continue to explore the Chinese AI and VR markets, indicating strategic international engagements.

Market Movements

Nvidia shares experienced a slight increase of 0.2% in premarket trading, reaching $905.63, following the broader market's positive trend on the first trading day of the second quarter. This movement comes after the stock market's closure on Friday and a modest 0.1% rise in Nvidia's stock on Thursday. Despite these gains, Nvidia's shares are still below their record high of $974 set the previous week. The S&P 500 and Nasdaq Composite also saw upticks in futures, trading up by 0.3% and 0.4%, respectively. Other semiconductor companies, including Advanced Micro Devices and Intel, recorded early trading increases of 0.2% and 0.5%.

Semiconductor Export Restrictions

The U.S. Department of Commerce announced plans to further restrict the sale of advanced artificial intelligence chips to China, aiming to close loopholes from last year's AI chip export restrictions. This decision led to a downturn in chip stock prices, with Nvidia closing down about 5%, and other companies like Broadcom, Marvell, AMD, and Intel also experiencing declines. The new rules will extend to chips such as the Nvidia H800, previously available to Chinese companies under compliance with U.S. restrictions. These measures are part of efforts to limit China's access to semiconductors that could advance artificial intelligence capabilities, particularly for military uses. Nvidia has stated that while the restrictions might impact long-term earnings, they do not foresee a "near-term meaningful impact on our financial results."

U.S.-China Tech Tensions

Following the U.S.'s tightened semiconductor export controls, China criticized President Joe Biden's decision, arguing it complicates trade and harms companies. This development is part of ongoing tensions between the two countries over technology and trade. In response to the U.S. actions, China imposed new restrictions on U.S. chipmakers, including Intel and AMD, leading to premarket share declines for both companies. Despite these challenges, U.S. tech firms continue to engage with the Chinese market, with Apple launching its Vision Pro headset and Meta partnering with Tencent to sell VR headsets in China.

AI and VR Market Dynamics

The escalating demand for artificial intelligence and virtual reality technologies is reshaping the semiconductor industry. Companies like Micron Technology have seen increased demand for chips used in AI applications, highlighting the sector's growth potential. Despite facing new restrictions in China, both AMD and Intel are pursuing opportunities in the AI market. Additionally, the VR market in China presents opportunities for U.S. tech giants, with Meta and Apple making strategic moves to introduce their products, despite regulatory hurdles.