us-china chip war escalates with new nvidia restrictions
Washington, D.C., Monday, 30 December 2024.
The US-China tech conflict is deepening as the Biden administration introduces new export restrictions on NVIDIA’s AI chips to China. This move could significantly disrupt NVIDIA’s market operations and impact its stock performance. A report from Zacks Investment Research highlights that continued tensions might affect leading semiconductor companies like NVIDIA, Micron, Intel, and Qualcomm. These companies face regulatory and market challenges, threatening their growth prospects. Over recent years, the US has implemented export controls to limit China’s access to advanced semiconductor technologies crucial for AI and other advanced technologies. Biden’s recent policies further tighten these controls, including a new investigation into China’s semiconductor supply chain. As a countermeasure, China has restricted rare earth metal exports. These developments mark a new era of economic conflict with potential long-term impacts on global tech industries.
Market implications for NVIDIA
NVIDIA faces mounting pressure as new US restrictions target its AI chips designed for the Chinese market, specifically the A800 and H800 models [1]. Beijing has responded with an antitrust investigation into NVIDIA [1], creating additional market uncertainty. The company’s revenue and profit margins could see significant negative impacts from these restrictions [1], especially considering China’s substantial market share in NVIDIA’s global sales [GPT].
Broader semiconductor industry impact
The escalating tech conflict affects multiple industry leaders beyond NVIDIA. Micron Technologies, with over 10% of its total revenue from Chinese sales, has already faced prohibitions on its products in China [1]. Intel and Qualcomm have also experienced substantial losses in the Chinese market after the Biden administration revoked their licenses to supply chips to Huawei [1].
Global supply chain disruption
Recent developments suggest a deepening divide in global semiconductor supply chains. TSMC’s new production facility in Kumamoto, Japan, which began operations on December 28, 2024 [2], represents a significant shift toward regionalizing chip manufacturing. This move aligns with broader industry efforts to reduce dependence on single markets [2][4].
Chinese response and economic implications
Chinese leader Xi Jinping has warned against the escalating trade tensions, stating that ‘tariff wars, trade wars, and technology wars go against the historical trend and economic laws, and there will be no winners’ [5]. China’s export growth has already shown signs of strain, growing only 6.7% in November 2024, below the forecasted 8.5% [5].