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Nvidia AI Chip. (Photo=Nvidia) |
[Alpha Biz= Paul Lee] Nvidia, the leader in artificial intelligence (AI) technology, saw its stock drop by over 5% on the New York Stock Exchange following news that China’s authorities are recommending a ban on the purchase of Nvidia’s H20 chips for data centers. The move comes as part of new regulations that require energy-efficient chips for AI data center construction.
On Thursday, Nvidia's stock closed at $113.76, a 5.74% decline from the previous day, marking the lowest closing price since March 11th, when it was $108.75. The company's market capitalization has dropped to $2.775 trillion, pushing it down to third place in market cap rankings, behind Apple and Microsoft.
The drop in Nvidia's stock was initially triggered by news that China was imposing stricter regulations on Nvidia’s products, including a ban on the export of advanced semiconductors. This was compounded by concerns over a potential escalation in trade tensions as the Trump administration was expected to announce tariffs on automobiles later in the day.
Financial Times reported that China’s top economic planning body, the National Development and Reform Commission (NDRC), introduced new rules requiring Chinese companies to use energy-efficient chips when constructing AI data centers. Under the new rules, Nvidia’s H20 chip, which is widely used in China, fails to meet the required energy efficiency standards. The H20 chip, while not as advanced as the latest graphic processing units (GPUs), had previously been able to avoid U.S. export restrictions to China.
Though the NDRC's regulations are currently only advisory, if enforced strictly, they could render Nvidia’s H20 chips unusable in China, a major market for the company.
Adding to the pressure, the U.S. Commerce Department added over 50 Chinese companies to its trade blacklist, which means that U.S. firms are now prohibited from supplying semiconductors to those companies without government approval. Several key Nvidia customers, including AMD and Intel, are on the blacklist, raising concerns about future revenue losses.
Other semiconductor stocks, which had previously gained on expectations that additional U.S. export regulations would prevent third countries from re-exporting American chips to China, also saw significant declines. Taiwan's TSMC (-4.09%), Broadcom (-4.78%), and AMD (-4.02%) all experienced notable drops. The Philadelphia Semiconductor Index fell 3.27% in response to the heightened uncertainty.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
