NVDA sinks 2% as Biden administration seeks to further limit AI chips from China – Crypto News – Crypto News
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NVDA sinks 2% as Biden administration seeks to further limit AI chips from China – Crypto News

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  • Nvidia stock sells off at the beginning of Friday’s session.
  • President Joe Biden’s administration intends to bar foreign units of Chinese companies from accessing Nvidia’s H100 and A100 GPUs.
  • NVDA stock has been rising for more than three weeks now.
  • Chinese companies have been remotely accessing AI chip technology remotely, according to Reuters.
  • US market climbs on bank stocks outperforming consensus for the third quarter.

 

Nvidia’s (NVDA) stock price has drooped 2% on Friday after Reuters reported that the Biden administration is attempting to close a loophole that allowed Chinese companies to gain access to state-of-the-art computer chips used for artificial intelligence (AI). In particular, Nvidia’s H100 Tensor Core GPU could be hurt by the new regulations.

Nvidia stock has moved in opposition to the Dow Jones, which has moved higher due to JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC) earnings results that proved much better than Wall Street consensus. The NASDAQ Composite and the S&P 500 have ignored the banks’ success and moved lower.

Nvidia stock news: Chinese corporation’s overseas units may also face AI chip ban

Last autumn, the Biden administration in Washington decided to get tough on China by banning exports to the mainland of Nvidia’s H100 and A100 GPUs, both of which are used in generative AI as well as military applications. In addition, Advanced Micro Devices’ (AMD) MI250 accelerator chip was also affected by the ban. At the time, Nvidia said the new regulations would cost it as much as $400 million in sales.

However, according to Reuters, the administration is now aware of mainland companies accessing the AI chips via a loophole that permits overseas units of Chinese companies to still procure the products. The foreign subsidiaries then either ship the chips illegally to the mainland or allow their companies to access the chip technology remotely though the infrastructure operates far outside China.

As per Reuters: “[T]he very chips barred by US regulations could be purchased from vendors in the famed Huaqiangbei electronics area in the southern Chinese city of Shenzhen.”

It is unclear exactly how Washington can completely wall off China from this AI technology however. Chinese corporations are already accessing the technology through third parties like Amazon Web Services, who utilize these chips in their industry-leading data centres.

Semiconductor stocks FAQs

A semiconductor is a term for various types of computer chips. Officially called semiconductor devices, these computer chips rely on semiconductor materials like silicon and gallium arsenide to process the electrical current that produces the modern world of computing. They come in many shapes, sizes, enhancements and configurations such as diodes, transistors and integrated circuits to more complicated applications like DRAM memory, simple processors and even GPUs.

First, there are the pure chip designers, such as Nvidia, AMD, Broadcom and Qualcomm. These companies use sophisticated software to design and test chips. Second, there are the equipment manufacturers that provide the machines necessary to build computer chips. These include ASML and Lam Research. Then, there are foundries that manufacture the chips. These include Taiwan Semiconductor and GlobalFoundries. Last of all are the integrated device manufacturers who design their own chips and additionally manufacture themselves. These include Samsung and Intel.

It is the observation that the number of transistors in an integrated circuit doubles every two years. The “law” is named after Gordon Moore, who founded Fairchild Semiconductor and later Intel. The doubling is possible due to the shrinking size of process nodes or parts in the computer chip. In 1971 the advanced commercial manufacturing had reached 10 microns in width. In 1987 semiconductor technology had advanced to 800 nanometers in width. By 1999, this process had moved to 180 nanometers. By 2007, the size had dropped to 32 nanometers, and this fell all the way to 3 nanometers in 2022, which is close to the size of human DNA.

In 2022, the global semiconductor industry had revenues just under $600 billion. In total, the industry shipped 1.15 trillion semiconductor units in 2021. The leading nations involved in the semiconductor supply chain are Taiwan, the United States, China, the Netherlands, South Korea, Japan and Israel.

Nvidia stock chart: MACD crossover shows uptrend still in motion

At the time of writing, Nvidia stock is down 0.8% to $465 per share. Investors need not worry though. Nvidia is continuing its uptrend that began after the stock bottomed out just below $410 on September 21. That means NVDA has been gradually advancing for three and a half weeks now, and there really is not sign that the party is about to end.

The Moving Average Convergence Divergence (MACD) indicator has been in a bullish crossover for a while now. The $470 range that acted as resistance on NVDA’s way down in late July could emerge as resistance once again. But the main trend here is a widening upward trend channel.

NVDA stock has already reached that top trendline four times over the course of this year. A fifth time would bring the premier semiconductor stock up to the vicinity of $550. With the MACD breaking above the zero threshold, that 18% leap does not seem improbable.

NVDA daily chart

 

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