In a bid to prevent the Chinese from capitalizing on American technologies to boost the competence of its military, the United States government announced its plans to put a stop to the shipment of chips for the nascent artificial intelligence (AI) sector to China.

At a press conference held on Monday, October 16th, US Commerce Secretary Gina Raimondo explained that this halt on exports is meant to limit the totalitarian nation’s access to advanced technologies that could give it a leg up when it comes to innovations that could boost its armed might.

Under the new regulations which will come into play beginning November 14th, semiconductor chips manufactured by companies like Intel, Microsemi, Nvidia, and Xilinx are banned from being sent to companies whose parent firms are based in China, its special economic zones Hong Kong and Macau, as well as other nations covered by the US embargo. This is regardless of their own geographical location.

Along with China, the ban also prevents the shipping of such chips to Iran and Russia. Likewise, the US government has also expanded export licensing requirements for advanced chips to over 40 other nations that could be used by Chinese firms to circumvent the ban, as well as those already under arms embargoes.

Not a Problem

Following the announcement, Nvidia released its own statement regarding its compliance with the new regulations. The company also pointed out that the ban will have little to no impact on its revenues. 

Indeed, since the initial curtailment of chips shipped to the Chinese mainland in October of last year, Nvidia’s business has improved considerably. The company also noted that it has sold virtually every chip it has on hand thanks to increased global demand which has now outstripped the existing supply.

However, the announcement sent tremors down the market as the leading chipmaker’s share value dropped by 3.7%. Meanwhile, its rivals Intel and AMD also saw their shares drop by 1% and 0.6% in succeeding hours.