The US Is Making It Harder For China To Get American Chips

The US Is Making It Harder For China To Get American Chips
Paul Allison, CFA

4 months ago2 mins

Mentioned in story

What’s going on here?

The US is making it even harder for China to get its hands on tantalizing American chips, according to recent news.

What does this mean?

The US announced a swathe of controls designed to limit China’s access to advanced chips around a year ago, but it’s not stopping there. Concerned that China’s on a mission to beef up its military arsenal using stateside tech, the US just clamped down even harder on exporting AI-compatible graphics chips and the complex chipmaking machines that can churn them out. But it might not be that easy: Chinese firms seem to have been getting their hands on Uncle Sam’s finest tech by routing it through other countries, and America's clocked on.

Why should I care?

For markets: Nvidia could be collateral.

US-based Nvidia’s been riding the AI wave all the way to the bank, giving its shareholders something to rave about. But these tighter chip controls could be a dampener: China accounts for 20 to 25% of Nvidia’s data center revenue, and Chinese firms may also have plumped up sales by stocking up in fear of even tighter restrictions. And sure, as a top dog in the tech world, Nvidia can probably rely on businesses elsewhere to keep it coasting. But if its Chinese buyers drop off for even a month or two, the short-term impact could tip the firm’s stock price off its podium.

Nvidia stock
Source: Google Finance

The bigger picture: The world’s a complicated place.

Tensions between the US and China are just a fraction of the geopolitical risks that today’s investors have to contend with. But remember, stock markets tend to wrangle their way through even the most testing environments if you give them enough time. So stay focused on the long-term outlook rather than current market turmoil, and make sure your portfolio’s diversified enough to hold its own throughout heightened volatility.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG