What happened? NVIDIA plunged nearly 8% intraday, and the market value of US chip stocks evaporated by $73 billion at one point.

On Tuesday, according to multiple domestic media reports, the Biden administration updated the export control regulations for artificial intelligence (AI) chips on October 17th, planning to prevent companies like NVIDIA from exporting advanced AI chips to China. According to the latest rules, the export of chips including A800 and H800 from NVIDIA to China will be affected. The new regulations will take effect after a 30-day public comment period.

According to China Fund News, last year, due to government restrictions, NVIDIA was unable to sell its two most advanced AI chips, A100 and H100, to Chinese customers. These chips have become industry standards for developing chatbots and other AI systems. However, NVIDIA quickly released "alternative versions" of these chips for the Chinese market, bypassing US export controls by removing certain performance features of the chips. The debugged H800 chip, in particular, has comparable computing power to the more powerful but blocked H100 chip in some AI tasks.

In response to the situation, NVIDIA stated to First Financial Daily, "We comply with all applicable regulations while striving to provide support for thousands of application products in different industries. Given the global demand for our products, we expect the new regulations to have no substantial impact on our financial performance in the short term."

In addition, the US has added 13 domestic companies to its Entity List. The newly added companies are mainly subsidiaries of two companies: Bitmain and Moore Thread, which mainly develop GPUs.

According to the official website of the Chinese Ministry of Foreign Affairs, on October 16th, spokesperson Zhao Lijian presided over a regular press conference. A reporter asked about the US taking measures to prevent US chip manufacturers from circumventing government restrictions on selling semiconductors to China. This move aims to address the issue of loopholes and is one of the actions the Biden administration will take to prevent more AI chip exports. What is China's comment on the US expanding restrictions on chip exports to China?

Zhao Lijian stated that China has repeatedly expressed its position on US export controls on chips to China. The US should stop politicizing, weaponizing, and disrupting global production and supply chains in economic, trade, and technological issues. China will closely follow relevant developments and resolutely safeguard its own rights and interests.

On Tuesday, during the midday trading session, NVIDIA's stock plummeted by 7.8%, marking the largest intraday decline since December 2022. The Philadelphia Semiconductor Index also dropped by over 2%, causing a total market value loss of $73 billion for chip stocks in the US. In terms of other important stocks, SLAB fell by 4.3%, Intel, AMD, Broadcom, and Marvell Technology fell by 2.7%-2.5%, SiFive fell by 1.5%, Qualcomm fell by 1.4%, and ASML fell by 0.9%.

Some analysts believe that the new regulations are expected. Although these restrictions may not have a significant short-term impact on NVIDIA, they may weaken its long-term prospects. Well-known industry analyst Guo Mingchi also agrees with this view, stating that NVIDIA will undoubtedly be negatively affected by the new ban. Guo Mingchi also mentioned that Intel may be a big loser in this situation. In addition, if the stock price of AMD drops significantly due to new regulations, it may create a buying opportunity in the short term, as its main customers are primarily North American CSP/service platform providers.