US chip stocks drop on new export restrictions

Shares of US chipmakers are dropping in the premarket today, following actions of the US authorities. The United States imposed export restrictions to China and Russia on some of the products made by NVIDIA, the company announced on Wednesday. Restrictions were imposed on data center chips with Artificial Intelligence application as well as some other high-performance products. Reasoning behind the move is an attempt to avoid those chips being illegally diverted for military use, for example for development of high-tech weapons. Companies that want to continue to export chips to China will have to apply for a special license. NVIDIA said that it aims to do so but is not sure whether US authorities will grant the exemption. Company said that restrictions may cost it $400 million in current quarter revenue.

Shares of NVIDIA (NVDA.US) are currently trading 5.5% lower in premarket while shares of the other US chipmaker Advanced Micro Devices (AMD.US) are pulling back 3.6%.

According to current pre-market quotes, NVIDIA (NVDA.US) is set to launch today's trading near recent lows, around 5.5% below yesterday's closing price. Source: xStation5