Given the current demand for components for the development of artificial intelligence (AI) technologies, one would think that the United States would see it as an advantageous situation for its IT sector. Unfortunately, this is not the case as the federal government is contemplating a new set of restrictions regarding the export of AI chips, particularly those being shipped to China.

In a report released on Tuesday, June 27th, the US Commerce Department announced that it will stop any shipments made by companies like Nvidia to Chinese customers by next month at the earliest.

Following the announcement, share value for Nvidia dropped by over 2% and that for Advanced Micro Devices (AMD) fell by 1.5%. Along with Micron, these firms have found themselves in a difficult position given the acrimonious dealings between the Biden administration and the Chinese government.

Last September, officials from Nvidia declared that several government officials asked them to cease exports to China, particularly for its two top AI computing chips. This resulted in the development of the export control-compliant A800 chip which the company planned to offer to its Chinese customers, as well as changes to its flagship chip, the H100, in compliance with new regulations.

However, the restrictions proposed by the Commerce Department will effectively ban the sale of even regulation-compliant chips unless companies apply for a special US export license.

The Commerce Department has yet to explain the proposed restrictions in detail.