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U.S. eases restrictions on Nvidia after banning AI chip exports to China

·2 min read

Nvidia shares finished week down almost 15% after the California-based semiconductor maker got caught in the high stakes' technology battle between the U.S. and China. American officials ordered the company to stop exporting two of its top computing chips to China.

But the U.S. followed up by giving the firm a little breathing room – for now.

Nvidia revealed in a Securities and Exchange Commission (SEC) filing on Wednesday that the U.S. informed the company last week of a new licensing requirement for its current highest-performing artificial intelligent chip, the A100, and its forthcoming next-generation AI chip currently in development, the H100.

The move effectively prohibits the company from exporting both chips to Chinese customers as the U.S. seeks to limit the spread of technology to China that could be used to make weapons amid escalating tensions between the two nations.

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Nvidia said the licensing requirements could delay its development of the H100, hinder its ability to provide A100s to customers, and might require the firm to move some of its operations out of China, where it has forecasted doing $400 million in sales in its third fiscal quarter ending October.

The news sent Nvidia shares tumbling.

Then on Thursday, the company filed an amended disclosure saying that the government had provided some reprieve by agreeing to allow the exports necessary to continue the development of the H100 through March 1 of next year, and authorized Nvidia to continue any exports needed to provide support for U.S. customers of the A100 until the same date.

The share decline offered a buying opportunity for Cathie Wood. The CEO and CIO of Ark Invest sold shares of Tesla to buy Nvidia, Barron's reported.

Jefferies analyst Mark Lipacis told Barron's the selloff was an "overreaction". Needham analyst Rajvindra Gill had a different view, calling the license a "significant headwind" for the company.

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The U.S. also agreed to allow Nvidia to fulfill orders through its Hong Kong facility through Sept. 1, 2023, meaning the company can ship outside China.

"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," a Nvidia spokesperson told FOX Business in an emailed statement. "The only current products that the new licensing requirement applies to are A100, H100 and systems such as DGX that include them."

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FOX Business' Ken Martina and the Associated Press contributed to this report.