Nvidia and a number of other chipmakers saw shares fall Tuesday morning after the U.S. announced new restrictions on exports of artificial intelligence chips to China.
Shares of chip stocks have boomed in the last year due to the increased demand for AI products and services, which is powered by AI chips.
The new restrictions on exports to China are a step up from previously announced restrictions on artificial intelligence chips that the Biden administration had implemented over the last year.
Nvidia closed down 4.7%, and Broadcom closed down 2%. Marvell and Intel mostly recovered by the final bell, posting drops of 0.9% and 1.4%, respectively.
The new restrictions ban the sale of the slowed-down version of Nvidia chips, the H800 and A800, that were allowed to be exported to China under the old restrictions.
"The updates are specifically designed to control access to computing power, which will significantly slow the PRC's development of next-generation frontier model, and could be leveraged in ways that threaten the U.S. and our allies, especially because they could be used for military uses and modernization," U.S. Commerce Secretary Gina Raimondo said on a call with reporters.
Nvidia believes that the increased restrictions will not immediately lead to a material effect on its financial performance. However, the company expects a loss in sales in the longer term, according to a statement from August.
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