Nvidia stock experienced a dip on Wednesday following reports that China has banned technology companies in the country from using its artificial intelligence chips.
The directive from China, which was first reported by the Financial Times, came from the Cyberspace Administration of China and is the latest move in a technological standoff that has already seen the United States restrict exports of high-end semiconductors to China.
Nvidia, the leading maker of AI chips, has been caught in the middle of the geopolitical dispute, with the Chinese ban raising new questions about the company’s business outlook in one of its largest former markets.
The Chinese government reportedly told state-owned and tech companies to halt orders of Nvidia’s RTX Pro 6000D AI chip, which was specifically made for companies located in China, according to The Financial Times.
Sources close to the situation claimed that there were multiple Chinese companies expected to purchase tens of thousands of the RTX Pro 6000D, leading to a significant loss of orders for Nvidia.
This directive appears to be part of the country’s broader strategy to reduce its reliance on American technology while bolstering domestic chip suppliers.
Nvidia CEO Jensen Huang directly addressed the decision on Wednesday, saying he was disappointed by the news but understands the reasoning behind the move.
“We probably contributed more to the China market than most countries have. And I’m disappointed with what I see,” he said, per CNBC.
“But they have larger agendas to work out between China and the United States, and I’m understanding of that.”
Huang added that maintaining the business in China has been “a bit of a rollercoaster” over the past few years, further noting that the company has “guided all financial analysts not to include China” in upcoming financial reports.
This move by China resulted in a significant hit to Nvidia’s stock price, with the current price being roughly 2% lower on Wednesday than when the market opened.