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Nvidia (NVDA) shares fell as much as 3% early Monday after the Biden administration published an updated export rule aimed at controlling the flow of artificial intelligence to “adversaries” such as China.
The White House said the rule would limit to 50,000 the number of AI chips called GPUs (graphics processing units) that most countries can order, without a special license. Smaller orders of 1700 GPUs or less would not count towards the export limit. About 18 US allies, including the UK, the Netherlands and Taiwan, will not face any restrictions.
As of 10:28:25 EST. Open Market
“The United States must act decisively to lead this transition by ensuring that American technology underpins the global use of AI and that adversaries cannot easily abuse advanced AI,” the White House said Monday in a statement.
For reference, Microsoft (MSFT) only as it says bought 485,000 of Nvidia’s Hopper GPUs only in 2024, while Meta (TARGET) bought 224,000 of the AI chips, according to The Financial Times.
The rule aims to close loopholes in previous restrictions on the export of AI chips in 2022 and 2023 “by curbing smuggling” and “raising AI security standards,” the White House said.
“While there have already been some restrictions on the sale of chips, there have been reports of advanced NVIDIA chips arriving in China, likely due to the fact that NVIDIA has limited control over its distributors,” said l DA Davidson analyst Gil Luria told Yahoo Finance in an email.
In addition to Nvidia’s advanced chips sold through resellers, Nvidia makes specific versions of chips that comply with current US trade restrictions in China. According to the FT, Nvidia’s H20 chips, its Hopper chips for China, they would not be subject to the new rule.
Nvidia’s vice president of government affairs, Ned Finkle, said in a statement Monday that the rule was “drafted in secret and without proper legislative review.”
“And by seeking to manipulate market outcomes and stifle competition, the lifeblood of innovation, the Biden Administration’s new rule threatens to squander America’s hard-earned technological advantage,” he said.
Companies have them a longer-than-usual 120-day period to comment on the restrictionsBloomberg reported, giving the Trump administration time to make changes to the rule, which will take effect in a year. Nvidia’s statement included an apparent appeal to the incoming administration.
“As the first Trump administration demonstrated, America wins through innovation, competition and sharing our technologies with the world, not retreating behind a wall of government overreach,” Finkle said. “We look forward to returning to policies that strengthen American leadership, strengthen our economy, and preserve our competitive advantage in AI and beyond.”
