US Tightens Chip Export Controls to China, Blacklists Chinese AI Firms

US blacklists Chinese companies over TSMC chips in Huawei processor

The Commerce Department also strengthened controls on the flow of chips to China to better prevent diversion to Huawei. Zhipu AI, Sophgo and entities linked to them were among 25 China-based companies and two Singapore-based companies added to the US Commerce Department's Entity List, according to government postings.The Biden administration added more than two dozen Chinese entities to a U.S. restricted trade list on Wednesday, including Zhipu AI, a developer of large language models, and Sophgo, a company whose TSMC-made chip was illegally incorporated into a Huawei artificial intelligence processor. The Commerce Department also strengthened controls on the flow of chips to China to better prevent diversion to Huawei. Zhipu AI, Sophgo and entities linked to them were among 25 China-based companies and two Singapore-based companies added to the US Commerce Department's Entity List, according to government postings. Companies on the list cannot receive goods or technology exports without a license, which is generally denied. Zhipu AI, whose investors have included Alibaba and Tencent, was added for advancing China's military modernization through advanced AI research. Sophgo drew attention after a chip found on Huawei's Ascend 910B multi-chip AI system matched one it ordered from Taiwan Semiconductor Manufacturing Co. Huawei was placed on the Entity List in 2019 and is now at the center of China's AI chip ambitions. Sophgo is among numerous companies that have been punished for helping Huawei. Late last year, the Commerce Department added other companies viewed as part of Huawei's shadow network to the restricted trade list. In a statement on its WeChat account late on Wednesday, Zhipu said the decision lacked a "factual basis" and its inclusion would not make a substantial impact on its business as it had mastered large language models' end-to-end core technology. Sophgo, an affiliate of bitcoin mining equipment supplier Bitmain, and Huawei did not immediately respond to a request for comment on the latest additions to the Entity List. In a statement on its website posted after the initial allegations in October, Sophgo said it "has never been engaged in any direct or indirect business relationship with Huawei." The U.S. on Wednesday also tightened rules on exports of semiconductors that can be used for AI. The new rules follow curbs the U.S. placed on TSMC after discovery of its chip in Huawei's Ascend 910B multi-chip system. As Reuters exclusively reported, the U.S. in November ordered TSMC to halt shipments of certain advanced chips. Adding new control The latest regulation adds new controls for chip factories and packaging companies seeking to export certain chips, building on earlier measures aimed at hampering China's access to chips that could help its military. The new restrictions affect chips at 14 or 16 nanometer nodes or below that meet certain parameters and can be used in AI applications, and impact companies beyond TSMC. A TSMC spokesperson declined comment. Samsung, which also may be affected by the changes, did not immediately respond to a request for comment. Chipmakers can bypass licensing requirements if certain conditions are met, such as working with trusted chip packagers and approved designers subject to due diligence and reporting obligations. "We are holding foundries accountable for verifying that their chips are not being diverted to restricted entities," Commerce official Alan Estevez said in a statement. The rule also imposes tighter restrictions around a type of memory known as DRAM that is needed to make high bandwidth memory, which is used in AI processors. The DRAM change will likely affect goods and technology destined for Chinese memory chip maker Changxin Memory Technologies, also known as CXMT, by imposing controls on more of its facilities, according to chip experts. CXMT did not immediately respond to a request for comment. Companies are added to the Entity List for activities viewed as contrary to U.S. national security or foreign policy interests. Besides Zhipu AI, nine other entities were added on Wednesday over military modernization through advanced AI research, most of them also Zhipu entities. One company was listed for helping develop lithography equipment for advanced chip factories in China. Sixteen companies listed, including the Sophgo units, are related to the development of chips that further China's advanced weapons systems, weapons of mass destruction and high-tech surveillance applications, and were also targeted because they pose a risk of diversion to Huawei, according to the Commerce Department. A spokesperson for the Chinese embassy in Washington did not immediately respond to a request for comment. Wednesday's rules are among a slew of export restrictions issued the last weeks of the Biden administration. On Monday, the U.S. put out an ambitious plan to control the development of advanced AI worldwide.

Biden administration adds 14 additional Chinese firms to trade blacklist

Days after pushing for sweeping AI chip export restriction, the Biden administration has added an additional 14 Chinese companies to its restricted trade list. This brings the full list up to 25 names, according to reporting from The Associate Press. Sophgo is, perhaps, the highest profile addition. An entity of Bitmain, the firm sparked international headlines when it was identified as an intermediary between embattled Chinese hardware giant Huawei and Taiwanese chipmaker TSMC. Suspicions arose in December after a chip found on Huawei's Ascend 910B AI processor was tied to a purchase Sophgo made from TSMC. At the time, the Biden administration announced plans to blacklist the firm, a promise on which it has now made good. The move comes among a flurry of activity during the waning days of the Biden administration. Response to Monday's "Interim Final Rule on Artificial Intelligence Diffusion" drew a swift and sharp response from the industry. American silicon AI giant Nvidia called the action "misguided." The statement praises the first Trump administration's handling of AI, while refusing to hold punches against the outgoing administration, In its last days in office, the Biden Administration seeks to undermine America's leadership with a 200+ page regulatory morass, drafted in secret and without proper legislative review. This sweeping overreach would impose bureaucratic control over how America's leading semiconductors, computers, systems and even software are designed and marketed globally. And by attempting to rig market outcomes and stifle competition -- the lifeblood of innovation -- the Biden Administration's new rule threatens to squander America's hard-won technological advantage. Of course, the Huawei blacklisting that has blocked the company from utilizing American-founded technologies including Google's Android and Qualcomm chips, arrived during the first Trump administration. How, precisely, this plays out isn't clear, as the incoming administration looks to continue a tough on China stance, while appearing to foster American innovation amid the AI race.

Biden wants to block China from getting TSMC's and Samsung's advanced chips

The outgoing Biden administration is introducing even more measures focused on keeping advanced chips out of China. The new regulations reinforce and build upon previous U.S. export controls aimed at restricting China from advanced semiconductors that can be used for artificial intelligence and military development. Under the rules, foundries and packaging companies that want to export certain chips are subject to a broader license requirement unless certain conditions are met. "Advanced AI capabilities -- facilitated by supercomputing, built on advanced semiconductors -- present U.S. national security concerns because they can be used to improve the speed and accuracy of military decision making, planning, and logistics," the U.S. Commerce Department's Bureau of Industry and Security (BIS) said in a statement. The new rules encourage chip producers, including Taiwan Semiconductor Manufacturing Company (TSM+1.89%), Samsung, and Intel (INTC+1.25%), to improve customer scrutiny and due diligence to prevent advanced technology from getting to Chinese customers, Bloomberg previously reported, citing unnamed people familiar with the matter. The measures follow the discovery of TSMC-made tech in a cutting-edge artificial intelligence chip developed by sanctioned Chinese tech giant Huawei in October. According to the BIS, the new rules improve reporting for transactions with new customers who could pose a risk of diverting semiconductor components to China. Earlier this week, the U.S. published new guidelines aimed at curbing AI chip sales from U.S. firms, including Nvidia (NVDA+2.10%), to specific countries and companies. The new export controls include three tiers of chip restrictions, which give friendly nations full access to U.S.-made chips but add new limitations to others. Meanwhile, the Netherlands released new rules aimed at Dutch semiconductor equipment maker ASML (ASML+0.29%). Under the new export controls, ASML must apply for licenses with the Dutch government rather than the U.S. government to export certain measuring and inspection tools. The rules will be effective starting on April 1. China-based Huawei and its chipmaker, Semiconductor Manufacturing International Corp. (SMIC), depended on ASML's deep ultraviolet lithography machines to make advanced chips. However, the Dutch government restricted sales of this advanced tech to China last year, which has been unable to build a similar version of ASML's equipment. China also cannot buy ASML's extreme ultraviolet, or EUV, machines, which are used to make advanced chips designed by Nvidia and Apple (AAPL+1.86%).

US tightens controls on advanced chips to curb flow to China

The United States unveiled further export controls Wednesday on advanced computing semiconductors, boosting due diligence requirements for businesses as it seeks to prevent diversion of tech to China despite existing restrictions. The move -- part of a series of actions before President Joe Biden leaves office -- comes days after US officials announced fresh curbs on AI chip exports, seeking to make it harder for Beijing to access the advanced technology. "These rules will further target and strengthen our controls to help ensure that the PRC and others who seek to circumvent our laws and undermine US national security fail in their efforts," Commerce Secretary Gina Raimondo said, referring to the People's Republic of China. Washington has expanded its efforts in recent years to curb exports of state-of-the-art chips to China, concerned that these can be used to advance Beijing's military systems and other tech capabilities, but there have been worries about circumvention. The latest controls aim to hold back China from getting high-end advanced computing semiconductors needed to develop tech like advanced artificial intelligence, the Commerce Department said. "By enhancing due diligence requirements, we are holding foundries accountable for verifying that their chips are not being diverted to restricted entities," said Alan Estevez, Commerce Department under secretary for industry and security. But the outgoing Biden administration's moves have drawn ire, with China's Ministry of Commerce saying Beijing was "strongly dissatisfied and firmly opposed" to them. The ministry vowed in a statement Wednesday that China would take measures to safeguard its interests. With the new rules, foundries and packaging companies that want to export certain advanced chips face broader license requirements unless they meet several conditions. The rules also aim to enhance reporting for transactions of newer customers "who may pose a heightened risk of diversion," said the US Commerce Department. Security risk The department on Wednesday placed additional entities on a list imposing trade restrictions amid concerns that they were acting to help further Beijing's goals of indigenous advanced chip production. Most were China-based but two were in Singapore. This "poses a risk to US and allied national security," said the Commerce Department. Apart from chip export controls, the United States finalized a rule this week effectively barring Chinese technology from cars in the American market. The announcement took aim at software and hardware from the world's second biggest economy over national security risks too. Meanwhile, Washington is mulling new restrictions to address risks posed by drones containing tech from adversaries like China and Russia. Beijing said Wednesday that the Biden administration's measures have "seriously infringed upon" Chinese companies' rights and interests. But the rollout of many plans will fall to President-elect Donald Trump, as he returns to the White House next week.

US to push TSMC, Samsung into tightening China chip supplies- Bloomberg By Investing.com

Investing.com-- The U.S. is planning more regulations aimed at limiting the flow of advanced chips made by TSMC and its peers into China, Bloomberg reported on Wednesday, adding to the flurry of restrictions imposed by the Biden administration in recent years. The proposed measures will encourage manufacturers such as TSMC (NYSE:TSM), Samsung Electronics Co Ltd (KS:005930), and Intel Corporation (NASDAQ:INTC) to more carefully scrutinize their customers for ties to blacklisted Chinese organizations, the Bloomberg report said. The Bloomberg report comes just days after the U.S. introduced even more restrictions on the export of advanced artificial intelligence chips, in a continued effort to cut China off from advances in the fast-growing technology. The U.S. had this week introduced even more restrictions on AI chip exports, specifically that it will introduce caps on the number of AI chips that can be exported to most countries. Unlimited access to U.S. AI technology will only be reserved for America's closest allies. Recent reports said that a shipment of TSMC's advanced chips was secretly diverted to Huawei Technologies, which is blacklisted by the U.S. for alleged ties to the Chinese military. Huawei is one of China's most advanced chipmakers, and has developed chips that rival offerings from majors such as NVIDIA Corporation (NASDAQ:NVDA) in the country. The latest round of restrictions went beyond just China, and capped off four years of steady chip crackdowns under the Biden administration. It is now unclear how incoming President Donald Trump will treat chip restrictions against China. Trump has presented a hawkish stance against Beijing, and intends to impose steep trade tariffs against the country.

In a private letter to U.S. President Biden, semiconductor industry groups blast incoming export rules

Several trade organizations including the Semiconductor Industry Association (SIA) and Semiconductor Equipment Materials International, have written a letter to outgoing U.S. President Joe Biden, raising concerns about new U.S. export controls, reports Reuters. The organizations, which represent chip developers, as well as producers of chipmaking tools, criticized the lack of industry consultation regarding regulations restricting the global use of American processors for AI. The letter comes after the Biden administration introduced a three-tier licensing system for U.S. made AI processors (such as Nvidia's H100 or B200 GPUs), requiring most countries to obtain licenses. High-bandwidth memory (HBM), essential for AI GPUs and ASICs, is also set to face stricter export restrictions, especially for sales to China. These changes could have significant impact on U.S. companies like AMD, Broadcom, Intel, Nvidia, and Micron, as well as the global semiconductor market. Nvidia has heavily condemned the decision. The trade organizations warned that these new restrictions could harm U.S. companies and shift market share to international competitors. The groups stressed the absence of meaningful consultation and public feedback on these economically significant policies. The trade groups urged the administration to reconsider the rules, emphasizing their long-term implications. Sales to China represents a significant figure for AMD, Intel, and Nvidia. Under the new export rules, these companies will be unable to sell almost any of their AI processors to Tier 3 countries -- such as Belarus, China, Iran, Macau, Russia, and other arms-embargoed nations -- which will severely harm their sales. Yet, China already has its own AI processors, such as Huawei's Ascend 900 series that may be slower than Nvidia's H20 HGX, but could be good enough to build a high-performance cluster for AI training. Since China could potentially sell these processors to other restricted countries, this will harm Nvidia's dominance on the AI market. Also, given the restrictions, some Tier 2 countries may reinforce their efforts to produce sovereign processors for AI and HPC based on open-source technologies, such as RISC-V, which will harm dominance of all American companies, such as AMD, Intel, and Nvidia. Additionally, the upcoming regulations might reverse a prior interpretation that benefited American producers of wafer fabrication tools, such as Applied Materials, KLA, and Lam Research. All of these companies generated billions selling their equipment to Chinese makers of 3D NAND, DRAM, and logic. The potential reversal could significantly impact its earnings. Neither the trade groups nor Lam Research responded to inquiries for comment, according to Reuters.

Chip industry groups slam expected rules in private letter to Biden

(Reuters) - A half-dozen trade groups from the semiconductor and manufacturing industries sent a private letter to U.S. President Joe Biden complaining that new export controls expected this week were rushed through without consulting them. The Biden administration on Monday released regulations on where computing chips from Nvidia can be placed around the world, setting up a three-tier system in which most nations will need to obtain licenses to build AI data centers with U.S. chips. In a letter to Biden dated January 13 that was not released publicly, trade groups including the Semiconductor Industry Association, which represents chip firms, and SEMI, which represents firms that make tools to manufacture chips, complained about that rule as well as another rule that could come as early as this week. "We understand that this additional rule will even more strictly control high bandwidth memory, without consideration of how such changes may impact U.S. companies or cede market share to global competitors," the letter said. "Again, these pending regulations have been developed without appropriate industry consultation or the opportunity for public comment, despite their long-term impacts and economic and international significance." The SIA and SEMI did not immediately respond to a request for comment. High-bandwidth memory, currently manufactured by U.S. and Korean firms, is a critical ingredient to building advanced AI chips, and the rule would restrict its sale to China. A source familiar with the expected rules said they could also reverse an earlier interpretation of the rules that allowed companies such as Lam Research, which supplies equipment to memory chip makers in China, to bring in hundreds of millions more dollars in revenue than it had previously anticipated. Lam did not immediately respond to a request for comment. (Reporting by Stephen Nellis in San Francisco; Editing by Michael Perry)

NVIDIA's AI GPU Export Control Rules Likely To Tighten Under Trump Admin, Says Analyst

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. The Biden Administration's sweeping set of new rules that restrict AI chip sales to countries not aligned with US national security interests are unlikely to be watered down by the incoming Trump Administration, believes a Taiwan-based semiconductor analyst. The export control rules, which came soon after the CES conference in Las Vegas and amidst a fresh set of media reports outlining troubles with Blackwell GPU supplies, drew a sharp backlash from NVIDIA. The company, which commands an effective monopoly over the global AI chip supply chain, called the new export control rules an attempt to "undermine" American technology leadership by placing control of semiconductor exports in bureaucratic hands. The Biden Administration's latest rules divide the countries to which NVIDIA's advanced AI GPUs can be exported into three categories. The first is a list of nations that are either aligned with US national security objectives or are not a threat to the US. These countries can secure the chips without any hindrance. The second category consists of hostile nations such as Russia and Iran, which are completely barred from procuring either US-origin GPUs or AI software. Finally, the third category limits countries such as India from importing large amounts of GPUs without scrutiny. These nations will be able to import 1,700 GPUs without regulatory scrutiny, and they are designed to prevent the targeted countries from building large-scale data centers capable of advanced defense research. The rules also limit key AI software parameters, such as model weights, from being disclosed to nations. NVIDIA's response to them was hard-hitting, as it characterized the rules as threatening to "to derail innovation and economic growth worldwide." NVIDIA admitted that the new rules will not come into effect until 120 days but cautioned that they were already "undercutting U.S. interests." However, despite NVIDIA's praise of the previous Trump presidency in its comments, one analyst believes that the export rules are only set to tighten during the incoming administration. Sharing his thoughts on X, Taipei-based financial analyst Dylan Nystedt outlined several factors that make it unlikely that the issue "might go away under President Trump." He believes that the reality might be different, and "If anything, the rules are likely to become more extreme over time, not less." He starts off by sharing comments made by TSMC's founder, Dr. Morris Chang, in 2023, where he shared his thoughts and remarked that globalization is dead. Dr. Chang had made similar remarks in 2022 and saw a media mogul agree with him. In his 2023 remarks, the former TSMC boss had also supported American policy objectives of slowing down China's progress. Nystedt also believes that supercomputers are helping adversarial nations such as China and Russia to develop advanced military technologies. He outlined, "Supercomputers have already helped Russia and China develop hypersonic missiles, better jet planes and engines, improved nuclear modeling, more." As a consequence, the analyst outlines that the fear among Washington policy circles is that "AI will be able to help adversaries build far better weapons than engineering and design software has already done." He also shared a highly circulated image of a purported Chinese sixth-generation fighter aircraft prototype that appears to rival Northrop Grumman's Next-Generation Air Dominance (NGAD) platform. According to Nystedt, NVIDIA is misguided in its criticism of the US government. He concludes by outlining that "In its [NVIDIA] zeal to drive computing forward for the good of mankind, it forgot evil exists in the world."

After Nvidia, Semiconductor Trade Groups Oppose Biden's Chip Export Measures: Rules Threaten To 'Derail Innovation And Economic Growth Worldwide' - Advanced Micro Devices (NASDAQ:AMD), Lam Research (NASDAQ:LRCX)

U.S. semiconductor trade groups have mounted strong opposition to the President Joe Biden administration's new chip export restrictions, warning of potential market share losses to global competitors in a private letter to Biden. What Happened: The letter Tuesday, signed by six trade organizations including the Semiconductor Industry Association and SEMI, criticized the administration's approach to implementing stricter controls on advanced computing chips and high-bandwidth memory technology, particularly regarding sales to China, Reuters reported. The pushback comes as the Commerce Department unveiled new regulations Monday creating a three-tier system for global chip exports. The rules require most nations to obtain licenses for building AI data centers using U.S. chips, while providing unrestricted access to 18 allied countries. Nvidia Corp. NVDA, which controls approximately 90% of the AI chip market, saw its shares drop 3% following the announcement. Advanced Micro Devices Inc. AMD fell 2% in response to the restrictions. "This rule threatens to derail innovation and economic growth worldwide," said Nvidia's VP of government affairs, Ned Finkle, in a statement on Monday. The pending regulations could particularly impact companies like Lam Research Corp. LRCX, potentially reversing earlier interpretations that had allowed hundreds of millions in additional revenue from Chinese memory chip makers, according to the report. "We understand that this additional rule will even more strictly control high bandwidth memory, without consideration of how such changes may impact U.S. companies or cede market share to global competitors," the letter said. See Also: South Korean President Yoon Suk Yeol Arrested -- KOSPI Edges Higher Despite Political Upheaval, Won Stable Why It Matters: Oracle Corp. Executive Vice President Ken Glueck warned the restrictions could reduce the international chip market for U.S. companies by up to 80%, significantly affecting the domestic cloud industry. The rules arrive amid escalating U.S.-China tensions over semiconductor technology. In December, the U.S. blacklisted 140 Chinese entities and restricted memory chip exports, prompting Beijing to implement retaliatory export controls on critical minerals. The regulations are set to take effect after a 120-day comment period, extending into the incoming President-elect Donald Trump's administration, raising questions about their long-term implementation and effectiveness in the rapidly evolving AI chip market. Read Next: Trump 2.0 Could Be Thwarted By Inflation, Mohamed El-Erian Notes Ahead Of CPI Data Release Image Via Shuttesrock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMDAdvanced Micro Devices Inc$115.83-1.27%Overview Rating:Speculative37.5%Technicals Analysis660100Financials Analysis200100WatchlistOverviewLRCXLam Research Corp$75.301.14%NVDANVIDIA Corp$131.29-1.46%Market News and Data brought to you by Benzinga APIs

How U.S. AI chip export curbs threaten Nvidia's revenue

Nvidia faces a significant revenue threat due to the latest U.S. export restrictions on artificial intelligence chips, designed to limit the global distribution of these coveted processors, analysts and investors said on Monday. The regulations, among the strongest yet from the Biden administration, limit AI chip exports to most countries except for a select group of close U.S. allies. They also maintain a block on exports to some countries, including China, as the U.S. tries to close regulatory loopholes and prevent Beijing from acquiring advanced chips that could bolster its military capabilities. Surging demand for AI chips has catapulted Nvidia into the ranks of the world's most valuable firms, with a market value exceeding $3 trillion. However, the new restrictions may complicate its ability to deliver the robust revenue growth that investors expect.

NVIDIA Investors Say "Meh" To Blackwell Overheating Rumors; China Semiconductor Association Slams Latest Chip Curbs As "Technological Hegemony"

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. NVIDIA shares are on a dramatically firmer footing today, last up over 2.5 percent in pre-market trading and helped along by a dovish PPI reading in the US, reports of a gradual tariff hike path under the incoming Trump administration 2.0, and a soothing report out of TSMC. Meanwhile, China's semiconductor industry is predictably still reeling from the expansive curbs placed by the outgoing Biden administration yesterday. We reported yesterday that NVIDIA's Blackwell AI servers purportedly continue to face overheating and glitching issues, apparently prompting the chipmaker's mega customers, including Microsoft, Google, and Meta, to pare their respective Blackwell orders. According to The Information, Blackwell's woes stem from the "way [those] chips connect," alluding to a possible flaw within TSMC's bespoke advanced packaging solution, Chip-on-Wafer-on-Substrate (CoWoS). Of course, NVIDIA has previously declared that it rectified Blackwell's performance-related teething issues by implementing minor changes to the photomask, a specific template that is used to create patterns on chip wafers. This brings us to the crux of the matter. DigiTimes is now reporting that, contrary to The Information's report, TSMC has "maintained" its Blackwell orders, negating the rumored decrease in orders from NVIDIA's mega customers. Elsewhere, the China Semiconductor Association has now issued a scathing statement on the Biden administration's latest steps to control AI diffusion, slamming what it sees as American "technological hegemony" and calling on the ex-US global tech industry to offer joint resistance. We reported yesterday that the outgoing Biden administration has now significantly tightened the US export controls around AI chips, all in a bid to restrict AI diffusion. Among other conditions, the new rules now require companies to meet specific trust and safety standards or face a curb on the number of advanced AI chips that they can procure. For its part, NVIDIA has slammed Biden administration's AI diffusion rules by declaring that they will "stifle innovation and undermine America's global technology leadership." The statement went on to note that "this rule will only harm the U.S. economy, set America back, and play into the hands of U.S. adversaries."

Nvidia Down 3%, AMD Falls 2% After White House Imposes New AI Chip Export Restrictions - NVIDIA (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD)

The White House on Monday declared new limitations on the export of artificial intelligence chips. This move is set to impact major tech companies, including Nvidia NVDA and Advanced Micro Devices AMD. What Happened: Following the announcement, Nvidia's shares experienced a 3% drop, while AMD's stock saw a 2% dip in premarket trade, according to data from Benzinga Pro. The interim final rule on artificial intelligence technology will impose restrictions on chip orders for most nations, according to the White House. However, 18 key allies and trusted partners will be exempted from these limitations. Countries that meet stringent security and trust criteria may apply for elevated privileges, while others will be capped at acquiring up to 50,000 advanced GPUs per country, as outlined in a White House fact sheet. See Also: US Stock Futures Indicate Lower Opening On Monday After Last Week's Steep Fall: Analyst Says It's A 'Buying Opportunity,' But Market May Dip Further If This Happens The Semiconductor Industry Association, representing major players like Nvidia and AMD, according to MarketWatch, has raised significant objections to the newly announced regulations. The group criticized the lack of industry consultation during the rule-making process and warned of severe consequences for U.S. leadership and global competitiveness in the semiconductor sector. Oracle's Executive Vice President, Ken Glueck, cautioned that the regulations could shrink the international chip market for U.S. companies by as much as 80%. He also noted that the rules, set to take effect 60 days after their publication, could have a profound impact on the U.S. cloud industry. Meanwhile, last week, Nvidia had expressed strong disapproval of the Biden administration's anticipated chip export restrictions, arguing that they would not bolster national security but instead push the world towards alternative technologies. "This last-minute Biden administration policy would be a legacy that will be criticized by U.S. industry and the global community," Ned Finkle, Nvidia's vice president of government affairs, said. In December, the U.S. blacklisted 140 Chinese entities and restricted exports of memory chips vital to artificial intelligence. Beijing had also retaliated with export bans and reviews for U.S.-bound shipments of these minerals. In late December, the Biden-led administration also launched a trade investigation into Chinese-produced "legacy" semiconductors. The "Section 301" investigation is slated to transition to the incoming administration of President-elect Donald Trump for completion. This could provide Trump with a chance to enforce the hefty 60% tariffs he has previously threatened on Chinese imports. Read Next: Michael Saylor's MicroStrategy Faces Risk If MSTR's 0% Convertible Bond Lenders Recall Non-Recourse Loans Due To Covenant Breach: Here's What It Means For Investors Photo by William Potter on Shutterstock Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. AMDAdvanced Micro Devices Inc$114.50-1.33%Overview Rating:Speculative37.5%Technicals Analysis660100Financials Analysis200100WatchlistOverviewNVDANVIDIA Corp$132.22-2.72%Market News and Data brought to you by Benzinga APIs

US Semiconductor Sanctions Spell Trouble for Nvidia, But May Benefit Big Tech - NVIDIA (NASDAQ:NVDA)

Potential U.S. AI chip sanctions could impact Nvidia's sales, with 17% of revenue tied to China and 56% from non-U.S. customers. Nvidia's NVDA U.S. Big Tech customers, including Microsoft Corp MSFT, Amazon.com Inc AMZN Amazon Web Services, Alphabet Inc GOOGL GOOG Google, and Meta Platforms Inc META postponed Blackwell GB200 rack orders due to overheating problems, Reuters cites the Information. A data center rack accommodates chips and cables. Reportedly, Nvidia's hyperscalar customers had placed orders worth $10 billion or more. The first rack shipments with Blackwell chips reportedly exhibited glitches in the chips' connections, prompting customers to postpone orders for an updated version or purchase the company's older AI chips. Also Read: Nvidia, Broadcom Among Goldman Highlights For AI Opportunities The Biden administration's potential AI chip and technology exports posed a double whammy for Nvidia. The ten leading global semiconductor companies slashed their capital expenditure plans to tackle overcapacity and weakening demand in electric vehicles and smartphones, with artificial intelligence offering minimal respite, Nikkei Asia reports. Capex plans for each company's fiscal 2024 dropped to $123.3 billion (down by 2%), implying a decline of $9.5 billion from their May estimates, which predicted a 6% growth. DA Davidson's Gil Luria told Reuters he expects the U.S. embargo to significantly affect (Nvidia's) market as up to 50% of its chips end up in countries that will be off-limits once the rules kick in. Dan Coatsworth of AJ Bell also voiced similar concerns about the sanctions to Reuters. Reuters cites the company's regulatory disclosures as indicating that Nvidia generates ~56% of its revenue from customers outside the U.S., with China making up about 17% of sales. Nvidia Vice President of Government Affairs Ned Finkle and the Semiconductor Industry Association had expressed dissatisfaction with the U.S. semiconductor sanctions that would hinder Nvidia's growth potential. Interestingly, the U.S. sanctions will benefit the U.S. Big Tech giants as they can grow their market share by seeking approval to establish data centers in countries affected by the embargo. Investors will closely watch for President-elect Donald Trump's take on the potential semiconductor embargo. Investors can gain exposure to stocks of companies that manufacture semiconductors through ProShares Ultra Semiconductors USD and Invesco PHLX Semiconductor ETF SOXQ. Price Action: NVDA stock traded higher by 1.53% to $135.27 premarket at the last check on Tuesday. Also Read: Taiwan Semiconductor Begins 4nm Chip Production in Arizona, Eyes $11.4 Billion Q4 Profit Photo by Tatiana Popova and rawf8 via Shuttterstock NVDANVIDIA Corp$135.371.61%Overview Rating:Good75%Technicals Analysis1000100Financials Analysis600100WatchlistOverviewAMZNAmazon.com Inc$219.490.47%GOOGAlphabet Inc$193.130.44%GOOGLAlphabet Inc$191.910.47%METAMeta Platforms Inc$609.300.16%MSFTMicrosoft Corp$419.190.48%SOXQInvesco PHLX Semiconductor ETF$39.600.28%USDProShares Ultra Semiconductors$65.502.06%Market News and Data brought to you by Benzinga APIs