The Ministry of Commerce of the United States has announced an extension of the export license requirements for high-tech products to Chinese companies. Previously, the criteria focused on banning the transfer of data into and out of chips, but now it encompasses overall efficiency standards. This has negatively impacted companies like NVIDIA, which previously had the ability to produce special chips for sale in the Chinese market.
In addition to adjusting the product criteria for export licensing, additional conditions have been imposed on companies prohibited from selling their goods. This restriction applies to any company affiliated with Chinese parent companies, regardless of their location. Moreover, a list of monitored countries must notify the government of any sales that do not meet the export ban criteria. For instance, gaming graphics cards must be reported to the government for usage verification, similar to AI applications.
This approach effectively closes the loophole that allowed NVIDIA to bypass the US government’s export restrictions on special chip models. Furthermore, it has resulted in a significant decline in pre-orders. Following this announcement, NVIDIA’s stock has plummeted by approximately 5%.
TLDR: The US Ministry of Commerce has expanded the export license requirements for high-tech products to Chinese companies, affecting NVIDIA’s ability to sell its special chip models. The updated criteria now include overall efficiency standards and also impose additional conditions on companies affiliated with Chinese parent companies. Failure to adhere to the ban may result in government monitoring and verification. As a result, NVIDIA’s stock has declined by around 5%.
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