Edited by: TJVNews.com

Shares of computer chipmakers plunged on Wednesday following an announcement from Nvidia that newly intensified U.S. government restrictions on exports of its advanced artificial intelligence (AI) chips to China will cost the company an estimated $5.5 billion in lost revenue. As The Associated Press (AP) reported, the sweeping export controls signal a major shift in Washington’s efforts to contain China’s AI development, sending shockwaves through global technology markets.

Nvidia revealed in a regulatory filing that the U.S. government has decided to apply indefinite licensing requirements to the company’s H20 integrated circuits, part of its most advanced AI product line. These chips, along with other high-bandwidth models, have been flagged as posing national security risks due to their potential diversion to Chinese military-linked supercomputers, the AP reported.

The Commerce Department confirmed that the controls specifically target Nvidia’s H20, Advanced Micro Devices’ (AMD) MI308, and “equivalent” chips. The agency emphasized that these measures are part of its broader mandate to “act on the President’s directive to safeguard our national and economic security,” the AP noted.

The immediate market reaction was severe. Nvidia shares dropped roughly 6% in early trading Wednesday, while AMD experienced a similar decline. In its own filing, AMD acknowledged that it anticipates a charge of around $800 million due to inventory write-downs, purchase obligations, and reserve adjustments stemming from the new restrictions.

The export control escalation came shortly after Senator Elizabeth Warren urged Commerce Secretary Howard Lutnick to impose tighter restrictions on AI chip exports to the People’s Republic of China (PRC). In a strongly worded letter published by the U.S. Senate’s Committee on Banking, Housing and Urban Affairs, Warren expressed “great concern” that the Biden administration had previously paused plans to restrict exports of powerful chips like Nvidia’s H20, the AP reported.

Warren specifically cited the emergence of China’s DeepSeek AI chatbot, which debuted in January, as a troubling sign that Chinese entities are rapidly accelerating their AI capabilities—potentially using U.S.-designed chips to do so.

While the Biden administration had initially excluded certain chips from its October 2022 restrictions, this recent development signifies a policy shift toward a more aggressive posture. Industry analysts quoted by the AP say this reflects growing bipartisan consensus in Washington that advanced AI chip exports must be more tightly controlled to curb China’s military and technological ambitions.

The ripple effects extended far beyond U.S. borders. Asian technology giants experienced steep losses as investors reacted to the escalating tech war between Washington and Beijing. According to the AP report, Japanese chip-testing equipment maker Advantest fell 6.7%, while Disco Corp. dropped 7.6% in Tokyo. Taiwan Semiconductor Manufacturing Company (TSMC), which manufactures chips for Nvidia and others, saw a 2.4% dip in its share price.

These declines underscore how deeply interconnected the global semiconductor supply chain remains—even as countries like the U.S. seek to decouple from China’s tech sector and re-shore manufacturing.

In a separate and strategically timed announcement earlier this week, Nvidia declared that it would begin producing its AI supercomputers and next-generation Blackwell chips in the United States for the first time. As the AP reported, the company has committed more than 1 million square feet of manufacturing space in Arizona and Texas, with plans to deliver up to $500 billion in AI infrastructure investment over the next four years.

The Trump administration has vowed to overhaul U.S. tariff policy on electronics by introducing sector-specific strategies focused on the semiconductor industry, the AP noted.