Nvidia and AMD Stock Tumble as U.S. Limits Exports to China

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Nvidia can’t catch a break.

Late Wednesday, the chip maker said in a filing the U.S. government has informed the company it has imposed a new licensing requirement, effective immediately, covering any exports of Nvidia’s A100 and upcoming H100 products to China, including Hong Kong, and Russia.

Nvidia’s A100 are used in data centers for artificial intelligence, data analytics, and high-performance computing applications, according to the company’s website.

The government “indicated that the new license requirement will address the risk that the covered products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China and Russia,” the filing said.

Nvidia

(ticker:

NVDA

) shares were down 7.9% to $139.04 shortly after the market opened on Thursday. F

Fellow chip maker

Advanced Micro Devices

(AMD) said it also received word of the new U.S. licensing requirement, but that it doesn’t expect the shift to have a significant effect on its business. Its stock was down was down 5.1%.

In Wednesday’s filing, Nvidia said it doesn’t sell any products to Russia, but noted its current outlook for the third fiscal quarter had included about $400 million in potential sales to China that could be affected by the new license requirement. The company also said the new restrictions may affect its ability to develop its H100 product on time and could potentially force it to move some operations out of China.

In an additional filing Thursday morning, Nvidia said it had received permission from the U.S. government for exports and in-country transfers in China that are needed for the development of the H100 product.

A Nvidia spokesperson told Barron’s in an email: “We are working with our customers in China to satisfy their planned or future purchases with alternative products and may seek licenses where replacements aren’t sufficient. The only current products that the new licensing requirement applies to are A100, H100 and systems such as DGX that include them.”

The latest development comes after a series of weak financial results from Nvidia. Last week, the company gave a revenue forecast for the October quarter that was significantly below expectations, citing a difficult macroeconomic environment and a rapid slowdown of demand.

Last Friday, Barron’s said more trouble lies ahead for the chip maker and that investors looking for a quick turnaround may be disappointed.

Nvidia’s stock has declined by about 53% this year, vs. the 34% drop in the

iShares Semiconductor ETF

(SOXX), which tracks the performance of the ICE Semiconductor Index.

Write to Tae Kim at [email protected]