Concerns over new US limitations on the selling of artificial intelligence chips to China have caused shares of major chipmakers Nvidia and AMD to decline.
To address the possibility of chips being “used in, or diverted to a’ military end use’… in China and Russia,” according to Nvidia, the US government needs a new license, starting immediately.
There are worries that the rule will result in millions of dollars in revenue being lost.
Shares of both chipmakers slipped in after-hours trading in New York.
Nvidia’s shares were down by 6.6% while AMD slipped by 3.7%.
The new restrictions are a “gut punch for Nvidia”, Dan Ives of Wedbush Securities told the BBC.
In a statement, Beijing said, “The US side should immediately stop its wrongdoing, treat companies from all over the world including Chinese companies fairly, and do more things that are conducive to the stability of the world economy.”
The US Commerce Department told the BBC it was “not in a position to outline specific policy changes at this time”.
“We are taking a comprehensive approach to implementing additional actions necessary related to technologies, end-uses, and end-users to protect US national security and foreign policy interests,” a Commerce Department spokesperson said.
“This includes preventing China’s acquisition and use of US technology in the context of its military-civil fusion program to fuel its military modernization efforts, conduct human rights abuses, and enable other malign activities.”
In a US regulatory filing on Wednesday, Nvidia said the new license requirement would hit exports of its A100 and H100 chips, which are designed to speed up machine learning tasks, and the systems which include them.
An Nvidia spokesperson told BBC it was liaising with customers in China “to satisfy their planned or future purchases with alternative products”.
Meanwhile, an AMD spokesperson said the rules, which would prevent the shipment of its MI250 chips to China, were not expected to have “a material impact” on business.
Both Nvidia and AMD halted sales to Russia after the invasion of Ukraine in February.
Analysts said the US requirements could make it more difficult for China to acquire chips for advanced computing.
It could also affect the earnings of US manufacturers such as Nvidia and AMD, said Mario Morales, a California-based analyst at market intelligence firm IDC.
Rising tensions
Last week, Nvidia reported revenue of $6.7bn in the second quarter, which was significantly lower than forecasts.
However, it said revenue from its data center business – which produces computer chips – surged by 61% from a year earlier.
“This is really a shot across the bow at China and it’s really going to fan those flames in terms of geopolitical (tensions). Nvidia’s caught in the crossfire,” Mr Ives said.
US and China have been locked in a long-running dispute over trade and technology.
Tensions between the world’s two biggest economies rose earlier this month after US politician Nancy Pelosi made a controversial visit to Taiwan.
China sees the self-ruled island as a part of its territory and insists it should be unified with the mainland, by force if necessary.