Nvidia Turns to Trump in Row Over Biden Chip-Export Curbs. The Stock Is Dropping

Nvidia Corp. (NVDA) has found itself in the midst of a geopolitical storm as the Biden administration's chip export curbs threaten to disrupt its global business. The company, a leading provider of AI chips, has expressed strong disapproval of the new regulations, which aim to limit the global sale of U.S. artificial intelligence chips. In response, Nvidia has turned to the incoming Trump administration, hoping for a more favorable stance on chip exports.

The Biden administration's new rules, expected to be announced as soon as Friday, are designed to curb chip exports to most nations, with a focus on preventing advanced technology from reaching China and Russia. The regulations will reportedly create a three-tiered structure for semiconductor exports, emphasizing access tiers for key U.S. allies, neutral nations, and restricted countries. China is expected to fall under the most severe tier, joining nations such as Russia, Iran, and Venezuela. This tier-based framework allows certain companies in restricted countries to bypass national limits by agreeing to U.S. security protocols and human rights standards.

Nvidia, which generates approximately 16% of its revenue from China, is concerned about the potential impact of these restrictions on its global revenue and market share. The company's specialized A800 and H800 chips, developed to comply with prior regulations, could now fall under new restrictions, potentially denting Nvidia's upcoming revenues. In response to the reported plan, Nvidia shares slipped more than 1% after markets closed on Wednesday, signaling a move below the 50-day line.

Nvidia's disapproval of the Biden administration's chip export curbs is not isolated. Tech giants like Oracle and influential semiconductor industry groups have also criticized the new restrictions, accusing the administration of bureaucratic overreach and saying they would harm U.S. competitiveness. Nvidia's vice president of government affairs, Ned Finkle, argued that the policy would not bolster national security but instead push the world towards alternative technologies. He contended that the policy, which includes a "country cap," would affect mainstream computers globally, questioning the logic behind the restrictions.

The Biden administration's chip export curbs are part of a broader strategy to concentrate artificial intelligence technology development with allies and on Washington's terms. Nvidia and other semiconductor companies are preparing for potential impacts from these restrictions, with the Biden government considering a fresh sanction on the export of AI chips used in data centers, both on a country and company basis, before the transition to the Republican government led by Donald Trump on Jan. 20. The proposed rules could enact three tiers of chip curbs, affecting the global semiconductor market and potentially altering the competitive landscape.

As the Biden administration's chip export curbs come into effect, Nvidia and other semiconductor companies will need to adapt to the new market dynamics and potential loss of revenue. The incoming Trump administration may modify or reverse the Biden administration's chip export policies, as indicated by the ongoing discussions between the outgoing and incoming administrations. The extent of the modifications or reversals will depend on the Trump administration's priorities and the feedback they receive from industry, experts, and partner countries during the 120-day comment period.

In conclusion, Nvidia's global business is facing significant challenges due to the Biden administration's chip export curbs. The company has expressed strong disapproval of the new regulations, which threaten to disrupt its global revenue and market share. As the Biden administration's policies come into effect, Nvidia and other semiconductor companies will need to adapt to the new market dynamics and potential loss of revenue. The incoming Trump administration may modify or reverse the Biden administration's chip export policies, depending on the feedback received during the 120-day comment period.