Nvidia Stock Drops as U.S. Limits Exports to China. 'Military End Use' Is Key.
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Nvidia’s A100 chips ae used in data centers for high-performance applications such as artificial intelligence.
Courtesy NVIDIA
Nvidia
can’t catch a break.
Late Wednesday, the chip maker said in a filing the U.S. government has informed the company it has imposed a new licensing requirement, effective immediately, covering any exports of Nvidia’s A100 and upcoming H100 products to China, including Hong Kong, and Russia.
Nvidia’s A100 are used in data centers for artificial intelligence, data analytics and high-performance computing applications, according to the company’s website.
The government “indicated that the new license requirement will address the risk that the covered products may be used in, or diverted to, a ‘military end use’ or ‘military end user’ in China and Russia,” the filing said.
Nvidia
(ticker:
NVDA
) shares fell by 3.9% to $145 in after hours trading.
Nvidia said it doesn’t sell any products to Russia, but noted its current outlook for the third fiscal quarter had included about $400 million in potential sales to China that could be affected by the new license requirement. The company also said the new restrictions may affect its ability to develop its H100 product on time and could potentially force it to move some operations out of China.
A Nvidia spokesperson told Barron’s in an email: “We are working with our customers in China to satisfy their planned or future purchases with alternative products and may seek licenses where replacements aren’t sufficient. The only current products that the new licensing requirement applies to are A100, H100 and systems such as DGX that include them.”
The latest development comes after a series of weak financial results from Nvidia. Last week, the company gave a revenue forecast for the October quarter that was significantly below expectations, citing a difficult macroeconomic environment and a rapid slowdown of demand.
Last Friday, Barron’s said more trouble lies ahead for the chip maker and that investors looking for a quick turnaround may be disappointed.
Nvidia’s stock has declined by about 49% this year, versus the 32% drop in the
iShares Semiconductor ETF
(SOXX), which tracks the performance of the ICE Semiconductor Index.
Write to Tae Kim at tae.kim@barrons.com
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