By Heraldviews
Nvidia, the world’s most valuable semiconductor company and a cornerstone of the artificial intelligence boom, saw its shares tumble more than 6 percent on Monday, as new U.S. export restrictions aimed at limiting China’s access to advanced chips appeared to deliver an unintended consequence: accelerating Beijing’s push toward technological self-sufficiency.
The
selloff followed reports that Chinese tech giant Huawei plans to begin mass
shipments of its advanced 910C AI chip as early as next month, a development
that signals not just resilience, but strategic gain, in response to
Washington’s tightening grip on semiconductor exports.
The
Biden administration’s latest curbs, rolled out last week, specifically
targeted Nvidia’s H20 chip, a product designed to comply with earlier
restrictions. The H20 had been one of the last remaining avenues for Nvidia to
maintain a foothold in the vast Chinese market. Its inclusion in the ban
underscores a dramatic pivot in U.S. policy: one that prioritizes long-term
strategic containment over short-term commercial interests, even at the cost of
American corporate giants.
The
crackdown, inherited and intensified from the Trump administration’s hawkish
stance on Chinese tech, is now drawing criticism from unexpected corners. “The
restrictions could ultimately do more to help Chinese chip companies than hurt
them,” analysts at Jefferies wrote in a note to investors Monday, warning that
the curbs might be catalyzing China’s domestic semiconductor industry in ways
policymakers had not fully anticipated.
At
the center of the storm is Nvidia. With a market capitalization nearing $2.5
trillion, the Silicon Valley titan dominates the AI infrastructure ecosystem.
Its chips, estimated to account for more than 80 percent of the global market
for AI training power everything from data centers and autonomous vehicles to
large language models like ChatGPT. But that dominance now appears increasingly
vulnerable to shifting geopolitical winds.
CEO
Jensen Huang was in China last week in what sources close to the company
described as a damage-control mission, seeking to reassure partners and
regulators that Nvidia remains committed to doing business in the region — a
region that, until recently, accounted for a significant portion of its global
revenue.
The
Chinese government has responded with fierce rhetoric, condemning what it
describes as economic coercion and strategic hostility. On Monday, the foreign
ministry in Beijing said it "firmly opposes" any U.S. attempts to
form trade pacts “at the expense of China,” a statement widely interpreted as a
rebuke of broader efforts to isolate Chinese tech from global supply chains.
In
financial markets, the fallout was swift. Nvidia’s decline contributed to a
broader tech sector slump, with the Nasdaq Composite down 12 percent over the
past month. The S&P 500 has dropped nearly 10 percent in the same period.
Nvidia alone now comprises more than 6 percent of the Nasdaq 100 and about 5.5
percent of the S&P 500, making its fluctuations a key lever in the movement
of major indexes.
“The
company’s gravitational pull on markets is enormous,” said Ranjit Kulkarni, a
semiconductor analyst at Rosenblatt Securities. “When Nvidia sneezes, the
Nasdaq catches a cold.”
What
remains unclear is whether Washington’s long-term strategy hamstringing China’s
AI ambitions will succeed, or whether it will simply force a realignment of
technological power. Early signs suggest that Chinese firms, from Huawei to
SMIC, are rapidly adapting, racing to close the gap on their U.S. counterparts
under the pressure of sanctions.
For
now, Nvidia remains the global AI chip leader. But as China doubles down on
self-reliance and Washington raises the stakes, the battle over silicon
supremacy has moved from trade policy to the trading floor, and the consequences
are rippling far beyond Wall Street.
With additional reporting from agencies.
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