Restrictions On AI Chips

Last week the Nvidia share price took a big hit after the US government imposed new export restrictions on high-end computer chips to China. The Feds are worried that these supercomputers can be used for military advancements. Nvidia was expecting $400 million worth of sales to China in the next quarter.

China already uses massive databases running on high-end chips to gather data and snoop on their population. Drone targeting and other sophisticated technologies are made possible by rapid data retrieval from cloud-hosted centres. I suppose you can understand the concern. Nvidia cannot control what Chinese buyers do with the chips once they have been sold.

Unfortunately, this is what happens when trade wars and anti-globalisation tendencies are the order of the day. Superpowers have political agendas and private companies are caught in the crossfire. We'd prefer to live in a world where international cooperation on technology is assured, but that seems to be unrealistic.

The US government plans to licence each new-generation chip separately, but has not yet stipulated the criteria it will use. That is work in progress I suppose. We are monitoring this situation closely but it certainly does not mean you should sell your Nvidia shares.