China's Internet regulator (CAC) has ordered the country's largest technology companies, including ByteDance and Alibaba, to halt purchases of Nvidia's AI chips and cancel existing orders, FT reported. The companies had planned to order tens of thousands of RTX Pro 6000D chips and had already started tests with Nvidia's server suppliers, but had to stop them after the CAC's decision. At the same time, authorities have called on domestic chipmakers such as Huawei and Cambricon, as well as Baidu and Alibaba, to compare their solutions with Nvidia's chips for the Chinese market. The move indicates an attempt to cut off domestic tech giants from US semiconductors and strengthen local manufacturers. Neither Alibaba nor ByteDance, Nvidia or CAC have addressed the issue. In response to the reports, Nvidia's shares fell 1.8% and AMD's fell 0.6% in pre-session trading.
The new news of a ban on Chinese tech companies buying Nvidia chips undermines the seemingly more constructive stance recently developed between the US and China on the TikTok issue, which offered hope even for progress in the area of trade agreements. Instead, the regulator's decision increases tensions between Washington and Beijing and is a fresh reminder of the geopolitical risks for the technology sector. For markets, this means an increase in uncertainty and potential volatility, especially since the signal comes just before today's key Fed meeting.
Nvidia's stock price in Europe is currently losing 1.8% following the news.
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