Nvidia and AMD Shares Tumble as Biden's AI Chip Clampdown Sparks Industry Outcry

On January 10th, reports emerged that Nvidia and AMD stocks experienced a downturn following the Biden administration's decision to tighten export controls on AI chips. The move has stirred significant debate, with Nvidia criticizing the upcoming restrictions as an overreach by the U.S. administration.

Nvidia's Vice President for Government Affairs, Ned Finkle, voiced that the so-called "country-specific mandates" fail to bolster national security and may inadvertently prompt a global shift towards alternative technologies. Further, the regulation is poised to classify countries into tiers, granting full import rights to "certain allies" while restricting others. The policy is expected to be formally announced shortly.

The Semiconductor Industry Association (SIA) echoed similar concerns, highlighting the extensive scope and potential complexity of the AI Diffusion Export Control Framework. SIA criticized the expedited process, arguing that the framework bypasses necessary industry consultations and could undermine the U.S. semiconductor sector's competitiveness.

While the Biden administration maintains that these rules are in the interest of national security, notable industry figures, like Oracle's Executive Vice President Ken Glueck, contend that the regulations could significantly impair the U.S. tech industry's historical open-innovation model. Glueck pointed out that regulatory overreach under the guise of national security could set a precedent detrimental to the innovation fostering environment that has historically spurred America's technological advances.

This regulatory development comes amidst the U.S. Department of Commerce's ongoing scrutiny of semiconductor exports, which includes adding new entities to export control lists. Critics argue that such measures may isolate the U.S. technological ecosystem under the guise of fortifying national interests, without necessarily addressing the core concerns of sensitive technologies.