Nvidia Corp faces a significant revenue threat due to the latest US export restrictions on artificial intelligence (AI) chips, designed to limit the global distribution of these coveted processors, analysts and investors said on Monday.
The regulations, among the strongest yet from US President Joe Biden’s administration, limit AI chip exports to most countries except for a select group of close US allies.
They also maintain a block on exports to some countries, including China, as the US tries to close regulatory loopholes and prevent Beijing from acquiring advanced chips that could bolster its military capabilities.
Photo: EPA-EFE
Surging demand for AI chips has catapulted Nvidia into the ranks of the world’s most valuable firms, with a market value exceeding US$3 trillion. However, the new restrictions might complicate its ability to deliver the robust revenue growth that investors expect.
“These rules will significantly limit [Nvidia’s] market since as much as half its chips currently end up in countries that will be off-limits once the rules are applied,” DA Davidson & Co analyst Gil Luria said.
Company filings show that Nvidia gets about 56 percent of its revenue from customers outside the US, with China making up about 17 percent of sales.
“By limiting access to large quantities of advanced processors, the US is effectively showing the world who’s the boss. However, in doing so, it also threatens to crimp the earnings potential for many American firms such as Nvidia,” AJ Bell PLC investment analyst Dan Coatsworth said.
Meanwhile, Nvidia cofounder and chief executive officer Jensen Huang (黃仁勳) is embarking on a trip to China this week, visiting major cities at a time Beijing is investigating his company’s domestic presence and Washington is slapping new curbs on the sale of its AI chips abroad.
Huang is due to arrive in Shenzhen for employees’ annual Lunar New Year celebrations today, days before US president-elect Donald Trump gets sworn in for a second term on Monday next week, people familiar with the matter said.
Huang also plans to visit Shanghai and Beijing, and would fly to Taipei later this week, they said.
Additional reporting by Bloomberg
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