Nosedive: Nvidia's Shares Plunge After $5.5 Billion Hit
The current export rules to China have led Nvidia shares on a downward spiral.
On Wednesday, Nvidia shares spiralled after the computer chip maker announced it would be hit by $5.5bn (£4.2bn) in costs, due to the US government tightening its export rules to China.
Trade War
As a leader in the growth of artificial intelligence (AI), Nvidia will require licences to export its H20 AI chip to China and Hong Kong, which has been one of its most popular. However, the present rules have come on the heels of the expanding trade war between the US and China, with both countries introducing steep trade tariffs on each other covering various goods.
Reports indicate that the Nvidia shares fell almost 7% on Wednesday, while the Nasdaq exchange it is listed ended the day down 3.1%. The tech giant said federal officials had advised them that the licence requirement "will be in effect for the indefinite future".
"The [government] indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China," Nvidia said.
Duel for Dominance
Computer and AI chips remain a significant point of interest in the US-China race for tech supremacy, and US President Donald Trump now wants to turbocharge a highly complex and delicate manufacturing process that has taken other regions decades to perfect. Nvidia's AI chips have been a key focus of US export controls. Founded in 1993, it was originally known for making the type of computer chips that process graphics, particularly for computer games.
Long before the AI revolution, it started adding features to its chips that it says help machine learning. It is now seen as a key company to watch to see how fast AI-powered tech is spreading across the business world.
