The share price of Nvidia Corporation NVDA Tanked Thursday in response to the US government’s decision to impose a license Restrictions on exporting AI chips to China.
Expert Take: TFI Securities Analyst Ming Chi Kuo said the government’s move will ensure the US maintains its leadership position in AI. However, the analyst noted that China is the frontrunner in terms of AI patent filings.
The affected chips, the H100 and A100 from Nvidia and Advanced Micro Devices, Inc. AMDare generated from the advanced nodes of , respectively Taiwan Semiconductor Manufacturing Co.Ltd TSM.
According to Kuo, AI development is one of a country’s key competitive skills and has applications in the aerospace and military sectors, among others.
See also: EXCLUSIVE: Why Nvidia could see a ‘$2 billion hit’ from US crackdown on Chinese chip exports in 2023
The sales restriction will have limited impact on suppliers like TSMC, Kuo said. However, investors are concerned about the possibility that the US may impose additional restrictions on more chips, which could impact more server-related or other products, he added.
“The uncertainty could be a structural risk for the semiconductor sector,” the analyst said.
Kuo said Chinese customers could directly or indirectly place “rush orders” to increase inventories to reduce risk related to a possible expansion of sales restrictions by the US government.
“If so, this could lead to an improvement in supply chain utilization in the short term.”
Price promotion: Nvidia closed Thursday’s session down 7.67% at $139.37 Benzinga Pro data.
