Nvidia Stock Dips Lower After Chip Sales Restriction To China

 Nvidia Stock Dips Lower After Chip Sales Restriction To China

NVIDIA Stock Dips Lower After Chip Sales Restriction To China

During the Wednesday trading session, the Nvidia stock dropped by 6.5% after news that the US government has restricted any chip sales in the Chinese market.

The company's recent filing with the SEC revealed that the US government had notified the company of new license requirements. According to the filing, the company is told to restrict its sales to China, especially the Hong Kong - The US government to ensure that the company's products are not used by the military of China.

According to Nvidia, the recent restrictions set forth by the US government will affect the H100 and A100 products. These GPUs are usually sold to businesses and are thus not so popular among retail users.

Nvidia Could Lose Around $400 Million In Sales

The new license requirements clearly state that any chip which can achieve equal or greater performance than the threshold will fall under the new restrictions.

Over all, the company stands to lose around $400 million in terms of sales in the Chinese market. Previously, the company's revenue forecast was close to $5.9 million.

Although the new rule also applies to the customers in Russia, it is not a big market for Nvidia. So on that front, the loss is minimum to none.

Over the last few years, the US government has heightened its export restrictions on chips and related materials. At the base of these restrictions is the fear that Chinese companies will use these chips to steal trade secrets or even use them for military purposes.

Nvidia has now applied to get an exemption from these restrictions set forth by the US government. But it still remains to be seen whether the US government will entertain that request or not.

According to NVIDIA spokesperson, they are working with Chinese customers to ensure that they are offered alternative products.

Right now, the new requirements for licensing only apply to H100, A100, and the DGX systems.

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