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Nvidia and Intel Valuation on New Chip Export Curbs

Geo-politics, Market Sentiment – NVDA and INTC

Rising geopolitical risks resulting in the implementation of new chip export restrictions will have significant implications for prominent companies in the semiconductor industry such as Nvidia and Intel. These restrictions have affected their stock prices and business operations, and have raised concerns about the future of the chip market and the AI industry as a whole.

The new chip export restrictions have had a direct impact on Nvidia’s stock performance. Following the announcement of the restrictions, Nvidia’s stock fell sharply. This decline can be attributed to the uncertainty surrounding Nvidia’s ability to export its advanced AI chips to China, one of its largest markets. Investors are concerned that the restrictions will hamper Nvidia’s revenue growth and market reach in the future.

The near-term outlook for Nvidia is uncertain due to the chip export restrictions. The company will need to find ways to adapt to the new regulatory environment and potentially explore alternative markets for its AI chips.

These chip restrictions have impacted investor confidence and uncertainty on the future of Nvidia’s revenue and profitability thus leading to adecline in stock value. The chart below shows the drop in the NVDA stock price.

NVDA Stock Price Chart

Stock performance of other semiconductor companies

The export restrictions on chips have not only impacted Nvidia and Intel but have also affected other semiconductor companies. The stock prices of these companies have been subject to volatility and declines, as investors assess the potential implications of the export restrictions. However, the extent of the impact varies depending on the company’s exposure to chip exports and the Chinese market.

Intel, another major player in the semiconductor industry, has also been affected by the chip export restrictions. While Intel’s exposure to the Chinese market is not as significant as Nvidia’s, the restrictions pose a threat to the company’s global business operations. Intel relies on a global supply chain and any disruption in the export of chips could impact its ability to meet demand and compete effectively.

INTC Stock Price Chart

Impact on the semiconductor industry

The chip export restrictions have wider implications for the entire semiconductor industry. These restrictions not only affect Nvidia and Intel, but also other companies that rely on the export of advanced semiconductors, particularly those in the AI chip sector. The restrictions could limit the growth potential of these companies and hinder technological advancements in the field of artificial intelligence. Competitors such as AMD and other manufacturers of advanced semiconductors will also need to navigate the new rules and licensing requirements.

ASML, a Dutch company that is the leading manufacturer of advanced lithography machines announced a huge drop in demand. See stock chart below:

ASML Stock Price Chart

Implications for the overall semiconductor industry

The chip export restrictions have raised concerns about the overall semiconductor industry and its ability to meet global demand. As supply chains are disrupted and export controls tighten, semiconductor companies may face challenges in fulfilling customer orders and keeping up with technological advancements. The industry may need to find alternative solutions and strategies to overcome these restrictions and ensure its long-term sustainability.

Additional analysis regarding the options of NVDA, INTC and ASML can be found in the two articles below: 

Volatility Analysis Report – Semiconductor Stocks

Option Statistics Report – Semiconductor Stocks

The reasons behind the implementation of chip export restrictions

The implementation of chip export restrictions is partly motivated by concerns over the Chinese market and the need for control. Advanced AI technology, facilitated by AI chips, has become a strategic priority for China. The U.S. government is wary of China’s rapid advancements in AI technology and its potential to surpass the U.S. in this field. By imposing export restrictions, the U.S. government aims to maintain an element of control over the development and use of AI technology in China, ensuring that it does not pose a threat to national security or technological dominance. In short, by restricting the export of advanced AI chips, the U.S. aims to slow down China’s progress in areas that specifically have military implications.

The role of the Biden administration

The chip export restrictions have been implemented under the Biden administration, which has taken a stricter stance on national security and economic competitiveness. The administration’s goal is to protect American interests, strengthen domestic semiconductor manufacturing, and ensure that U.S. technology does not fall into the wrong hands. The new restrictions are a part of the administration’s broader strategy to safeguard critical technologies.

Responses from Nvidia and Intel

Nvidia and Intel, along with other affected companies, are likely to respond to the new chip export restrictions strategically. These companies may explore alternative markets, diversify their product offerings, or seek partnerships to ensure their business continuity. Additionally, they may engage in lobbying efforts to influence policymakers and shape future regulations in a way that benefits the industry.