In a significant blow to the tech industry, shares of Nvidia and Advanced Micro Devices (AMD) fell sharply in after-hours trading on April 15, 2025, following the announcement of new U.S. restrictions on artificial intelligence (AI) chip sales to China. Nvidia, a leader in the AI chip market, revealed in a regulatory filing that it expects to incur approximately $5.5 billion in charges related to its AI chip inventory due to these export restrictions.
The U.S. government informed Nvidia on April 9 that export licenses would now be required for its H20 integrated circuits and any chips with similar bandwidth capacity. This move specifically targets sales to China, Hong Kong, and Macau, raising concerns that these chips could be used in supercomputers in China, which has been a focal point of U.S. national security concerns.
“First quarter results are expected to include up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves,” Nvidia stated in its filing. This hefty charge reflects the company's inability to sell its most advanced AI chips to one of its largest markets.
The restrictions come amid escalating tensions between the U.S. and China, with the Trump administration initially putting the export restrictions on hold after a meeting between President Trump and Nvidia CEO Jensen Huang earlier this month. However, those plans have since changed, leading to significant uncertainty in the tech sector.
On April 14, Nvidia announced plans to invest hundreds of millions of dollars over the next four years to manufacture some AI chips in the U.S. Despite this effort to bolster domestic production, the company's stock still experienced a decline of 6% in after-hours trading, closing at $105. Nvidia's stock has now fallen 22% this year, reflecting broader market concerns amid the ongoing trade war.
AMD also felt the impact of Nvidia's troubles, with its shares dropping more than 7% to $88.55 in after-hours trading. Since the beginning of the year, AMD's stock has plummeted over 25%, illustrating the widespread effects of the trade restrictions on major players in the semiconductor industry.
In a broader context, the fallout from these new restrictions has sparked fears of a tit-for-tat trade war between the U.S. and China. Analysts are concerned that such moves could prolong the current stalemate, with both nations believing they hold the upper hand. “This disclosure is a clear sign that Nvidia now has massive restrictions and hurdles in selling to China,” said Daniel Ives, an analyst at Wedbush Securities.
As the situation unfolds, the market is reacting to the uncertainty, with gold prices climbing to a record high of $3,290 per ounce, reflecting a shift in investor sentiment towards safer assets. The rising prices of gold suggest that investors are hedging against potential economic instability stemming from the trade tensions.
In addition to the impact on tech stocks, the U.S. dollar also weakened against safe-haven currencies like the Swiss franc and the Japanese yen. The dollar fell 1.1% to 0.8145 Swiss franc and dropped 0.7% to 142.32 yen. Bank of Japan Governor Kazuo Ueda indicated that the central bank might need to take action if U.S. tariffs adversely affect the Japanese economy, signaling potential shifts in monetary policy.
With the benchmark 10-year Treasury yield steady at 4.325% and the 30-year yield little changed at 4.777%, the market is bracing for potential volatility as Federal Reserve Chair Jerome Powell prepares to speak later in the day. Traders are eager to hear whether Powell will adopt a dovish stance similar to that of Fed Governor Christopher Waller or maintain a more balanced approach.
The implications of these trade restrictions extend beyond immediate financial impacts. They are likely to reshape the landscape of the global semiconductor industry, as companies like Nvidia and AMD navigate the complexities of compliance with U.S. regulations while trying to maintain their competitive edge in the rapidly evolving AI market. The restrictions could also incentivize companies to accelerate their efforts to diversify supply chains and develop alternative markets outside of China.
The ongoing developments in U.S.-China relations and the tech sector's response highlight the intricate balance between national security interests and economic competitiveness. As tensions continue to rise, stakeholders in the technology industry will be closely monitoring the situation, hoping for clarity and stability in a market that is increasingly characterized by uncertainty.
In summary, the recent U.S. export restrictions on AI chips to China have sent shockwaves through the tech industry, particularly affecting Nvidia and AMD. As both companies grapple with significant financial implications, the broader market is reacting to the potential for prolonged trade tensions between the U.S. and China. Investors are turning to safer assets as uncertainty looms, and the tech landscape may be forced to adapt to a new reality shaped by these regulatory changes.
