English
Back
Download
Log in to access Online Inquiry
Back to the Top
TSMC's Q4 Results Beat Expectations: Can its stock price reach a new high?
Views 69K Contents 91

What President Joe Biden's Last-minute AI Chip Curbs Mean for Nvidia

avatar
Analysts Notebook joined discussion · Jan 14 17:59
President Biden announced a new global control system for AI chips on Monday, identifying 18 companies and regions deemed reliable enough to have unrestricted access to advanced US AI chips. Countries like Canada, Australia, and Japan will enjoy VIP status, always receiving BIS authorization for these high-tech chips. Conversely, most nations outside this privileged group will face limited access, with specific quotas set, while 24 countries under arms control restrictions, including China, North Korea, and Russia, will continue to face a complete ban on the latest AI chip exports. This move is expected to further complicate acquisitions of cutting-edge NVIDIA chips for Chinese entities.
Following this announcement, $NVIDIA (NVDA.US)$'s shares dropped nearly 2% during Monday's trading, alongside declines in its key GPU supplier, $Micron Technology (MU.US)$, and GPU manufacturer $Taiwan Semiconductor (TSM.US)$, which saw their stocks fall by over 4% and 3%, respectively.
What President Joe Biden's Last-minute AI Chip Curbs Mean for Nvidia
Potential Sales Impact on Nvidia
If enforced, the export restrictions could dampen Nvidia's sales. In the unrestricted tier, countries like the US and Taiwan constitute 65% of Nvidia's total sales. Singapore, contributing 15-20% of last year's revenue and not classified as a country of concern, poses a risk given the potential for Chinese customers to reroute orders through its subsidiaries and other nations. In the worst-case scenario, by the third quarter of 2025, 43% of the revenue could be impacted on a geographic basis if export restrictions are fully enforced.
What President Joe Biden's Last-minute AI Chip Curbs Mean for Nvidia
Nvidia's data-center sales continue to be affected by the export ban to China. Although the company has managed to ship revised chip models, the new US curbs could impede the rerouting of these chips through other countries. A significant share of data-center revenue comes from US hyperscalers and global cloud providers, but the ban limits growth prospects as China hosts several major cloud providers. Chinese internet giants have reportedly ordered over $10 billion of Nvidia's hopper-compliant series chips through 2024, with potential robust growth for newly designed B20 and GB20 chips, unless further curtailed by the US.
What President Joe Biden's Last-minute AI Chip Curbs Mean for Nvidia
In the past year, China accounted for 12% of Nvidia's revenue, a decrease from 20-25% in 2023. Current US restrictions affect mainly the 800-series chips in the data-center segment. Historically, Nvidia has developed tailored solutions for Chinese buyers not covered by US restrictions, including ongoing shipments of H20 chips and upcoming releases of B20 and GB20 chips. Nvidia's influence in China, which extends to the consumer, gaming, and automotive sectors, remains unaffected by the new restrictions.
What President Joe Biden's Last-minute AI Chip Curbs Mean for Nvidia
Analysts Kunjan Sobhani and Oscar Hernandez Tejada from Bloomberg Intelligence suggest that the proposed AI chip export curbs are unlikely to significantly impact Nvidia's short-term revenue despite the potential overall curb. This is partly because the lengthy implementation timeline, scheduled to commence in a year, could be subject to modifications by the Trump administration.
Uncertainty Over Future Implementation
As Sobhani and Hernandez Tejada highlighted, the AI chip control system introduced by Biden is potentially adjusted under the Trump administration. Echoing this view, Jefferies analyst Edison Lee, renowned for his insights on chip regulations, indicated in a Monday memo that Trump might not follow through to Biden's framework.
Lee points out several reasons for this potential deviation. First, Trump's policies predominantly revolve around tariffs rather than sanctions, with his primary sanction during his last term targeting only Huawei. Secondly, the export controls proposed do not align with Trump's emphasis on boosting U.S. government revenue. Thirdly, the complexity of Biden's control system poses significant challenges for both government implementation and corporate compliance, contrasting sharply with Trump's policies aimed at reducing federal size and deregulating industries. Lastly, given that this might be considered Biden's last dance, Trump has little incentive to continue support. "If Trump wants to, we believe he could revoke this export control system," Lee stated.
Source: Yahoo Finance, Bloomberg, Jefferies
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
35
5
3
3
2
+0
8
Translate
Report
128K Views
Comment
Sign in to post a comment
avatar
Analysts Notebook
Moomoo News Official Account
How do analysts evaluate the market?
19K
Followers
46
Following
39K
Visitors
Follow
Discussing
Trump 2.0 Era: How will global markets evolve?
🎙️Discussion: 1. How will tariff policies affect the movement of key assets such as U.S. stocks, gold, and Bitcoin? 2. Given this context, Show More
Reassessing Chinese Assets
Following the introduction of China's groundbreaking DeepSeek technology, Wall Street giants have revised their investment outlooks for the Chinese market.