PC: Ironity

In after-hours trading on Wednesday, Nvidia shares dropped 6.5% after the company claimed that the United States government is limiting sales in China.

Nvidia claimed in a filing with the SEC that the U.S. government informed it on August 26 about a new licencing requirement for upcoming exports to China, including Hong Kong, in order to lessen the possibility that the goods would be used by the Chinese military.

The A100 and H100 devices, which are graphics processing units offered to businesses, will be impacted by the restriction, according to Nvidia.

The document stated that any future Nvidia integrated circuit that achieves peak performance and chip-to-chip I/O performance levels that are equal to or greater than those of the A100, as well as any system that uses those circuits, are subject to the licence requirement.

After having previously projected $5.9 billion in revenue for the current quarter, the corporation now anticipates that it may lose $400 million in potential sales in China. Although Nvidia claimed it doesn’t have any paying clients in Russia, the new rule does apply to sales there.

Since the Chinese government has been accused of stealing trade secrets and using American technology for military purposes, the U.S. government has tightened export regulations on chips created in the country.

Nvidia stated that it was requesting a permission to continue some exports to China but is unsure as to whether the United States government will give an exemption.

According to an Nvidia spokeswoman, “We are working with our clients in China to meet their planned or future orders with alternative goods and may seek licences if substitutes aren’t enough.” “The new licencing requirement only applies to A100, H100, and systems like DGX that contain them as current products.”

The U.S. Department of Commerce had also sent AMD new licencing requirements, which it believed related to its MI250 artificial intelligence circuit, a spokesman of AMD confirmed to CNBC. According to AMD, the new restrictions won’t have a meaningful impact on company operations.

A department spokesperson told CNBC, “While we are not in a position to outline specific policy changes at this time, we are taking a comprehensive approach to implement additional actions necessary to protect U.S. national security and foreign policy interests related to technologies, end-uses, and end-users.”