Shares of Nvidia dipped 3.7% and AMD fell about 3% in premarket trading after The Wall Street Journal reported the federal government is weighing new restrictions on exports of sophisticated chips used in artificial intelligence computing to China.
The export restrictions under consideration would be imposed by the Commerce Department and would come after the U.S. government already limited the computing power of chips made for Chinese use. Nvidia and AMD had been impacted by the prior limitation.
Other chipmakers also fell in premarket trading on the news. Marvell dipped more than 2%, and Broadcom and Qualcomm both dropped about 1%.
Nvidia responded to the earlier restrictions by building a lower-spec chip for the Chinese market. But under the new controls being considered, even that chip, the A800, would be export restricted without licensing, the Wall Street Journal reported.
The restrictions would also apply to companies that offer cloud-based computing solutions, the Journal reported, which have been used by some companies to skirt export controls.
Competition between the U.S. and China over hardware and software technology has amplified in recent years. Cybersecurity threats from Chinese state-backed threats have been identified by top U.S. officials as one of the top national security threats facing the United States. Sensitive technology has allegedly been stolen from American companies to benefit Chinese domestic competitors, whether through outright industrial espionage or through joint-venture projects, which require American companies to partner with Chinese firms to do business within China.
Against this backdrop, tightened chip export controls would likely further inflame trade tensions between the two countries. U.S. officials have tried to mitigate potential impacts, but a tightening of export controls would likely jeopardize those efforts. Gina Raimondo, who as Secretary of Commerce would lead the enforcement of any export controls, met with her Chinese counterpart in Beijing earlier this year.