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Rise in U.S. Chip Stocks Amidst Latest Restrictions

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Nvidia and other U.S. chip stocks have demonstrated resilience in the face of the Biden administration’s recent limitations imposed on the Chinese semiconductor sector. While constraints on investments in China are less concerning than export bans, U.S. semiconductor companies remain largely undeterred.

The White House issued an executive order on Wednesday, mandating a ban on U.S. investment in China pertaining to advanced semiconductors. Additionally, American investors are now required to inform Washington about investments made in other types of semiconductors and artificial intelligence.

Despite several previous restrictions on investment in China’s chip industry, U.S. semiconductor companies, including Nvidia (ticker: NVDA), Intel (INTC), and Advanced Micro Devices (AMD), are continuing to perform well. Pre-market trading indicates a 0.8% increase for Nvidia stock, aligning with the upward trend observed for Intel and Advanced Micro Devices.

It is important to note that U.S. companies already face significant limitations when it comes to investing in China. However, the potential for future restrictions on exports holds greater significance. While restrictions do exist regarding the sale of cutting-edge semiconductor technology to China, U.S. companies still engage in transactions involving more basic chips and technologies with Chinese customers.

A prime example of this includes Chinese tech giants Alibaba (BABA), Tencent, Baidu (BIDU), and TikTok-owner ByteDance collectively placing orders worth approximately $5 billion for Nvidia’s A800 chips, slated for delivery within this year and the next. Financial Times reports, citing insiders familiar with the situation, confirm these transactions.

The A800 chip developed by Nvidia is a graphics-processing unit intentionally designed with limited capacity to circumvent the U.S. government’s export ban on semiconductor technology to China. Independent analyst Richard Windsor, who publishes Radio Free Mobile, warns that there is a strong possibility of further tightening regulations, potentially rendering the A800 unavailable for sale in the Chinese market.

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