On Wednesday, the U.S. added over 50 Chinese companies to its blacklist.
These companies will now be unable to obtain advanced semiconductors from companies like Nvidia and AMD.
Semiconductor stocks had previously been rallying on expectations that the U.S. would focus on regulating countries importing American semiconductors from bypassing exports to China instead of imposing additional direct export restrictions. However, stock prices quickly declined as additional regulations were announced.
Nvidia’s stock plunged 6% in afternoon trading.
U.S. Ramps Up Pressure on China’s AI Ambitions
The U.S. government took additional steps to curb China’s artificial intelligence advancements.
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) added 80 entities to its blacklist.
Over 50 of these are Chinese organizations.
U.S. companies are now prohibited from supplying semiconductors to blacklisted entities without government approval.
The BIS justified this action by claiming these companies acted against U.S. national security and foreign policy interests. As a result, the U.S. has taken steps further to restrict the expansion of China’s computing capabilities.
The Department of Commerce stated that dozens of Chinese organizations are involved in developing advanced AI, supercomputers, and high-performance AI semiconductors, and that these entities were blacklisted for attempting to use these technologies for military purposes.
The Department of Commerce added that two of the blacklisted entities had supplied semiconductors to other blacklisted companies, including Huawei and its chip-making subsidiary HiSilicon.
Twenty-seven Chinese firms were sanctioned for acquiring U.S.-made or U.S. technology-based semiconductors to support China’s military modernization. In contrast, seven others were blacklisted for obtaining semiconductors to advance China’s quantum technology.
Additionally, six subsidiaries of Inspur Group, a cloud company blacklisted during the Biden administration in 2023, were added to the list.
Closing Loopholes for Nvidia and AMD Chip Exports
Alex Capri, a senior lecturer at the National University of Singapore, told CNBC that this latest addition to the blacklist effectively blocks China’s ability to circumvent restrictions by importing semiconductors through third countries.
Capri explained that Chinese companies had been able to access U.S. strategic technologies, which could be used for both civilian and military purposes, through third parties. Despite the regulations, they had exploited regulatory loopholes to access U.S. semiconductors.
He predicted that U.S. authorities would intensify their efforts to track and monitor the smuggling of advanced semiconductors from Nvidia and AMD.
Semiconductor Stocks Take a Hit
The news triggered a sharp sell-off in semiconductor stocks.
Nvidia, a leader in AI semiconductors, saw its stock price tumble 6.3% in afternoon trading. Worsening market sentiment following Trump’s announcement of auto tariffs exacerbated the situation. Nvidia shares fell $7.64 (6.33%) to $113.05.
AMD’s stock dropped $5.37 (4.68%) to $109.44, while ARM Holdings, a semiconductor design company, plummeted $8.83 (7.10%) to $115.45.
Broadcom’s shares declined by $9.69 (5.15%) to $178.57.
Micron Technology, specializing in memory semiconductors for AI applications, saw its stock fall $2.95 (3.13%) to $91.23, while Intel Corporation traded down $0.77 (3.16%) to $23.43.
