On August 31, 2022, Nvidia (NVDA) revealed after its earnings report new restrictions. The U.S.
government told it to stop selling chips to China and Russia.
Nvidia will apply for a license for various exceptions. However, its severity on future revenue is
unknown. China is a big market for Nvidia. AMD also faces new licensing requirements from the U.S.
Department of Commerce.
Hope that US-China trade and commerce rose recently. Chinese firms are on the first step of retaining
their listing on U.S. markets. Strangely, the U.S. stock exchange allows Hong Kong-based firms to list
through initial public offerings. For example, recent small $40 million IPOs like GigaCloud undermine the
SEC. Bears cannot short-sell these obscure listings for the first 30 days of listing. Conversely, established
firms like Alibaba (BABA) and JD.com (JD) are under threat of a de-listing.
Nvidia’s chip restriction will cripple China. Huawei is already shrinking because it cannot develop
advanced smartphones. The 5G smartphone and networking industry cannot advance in China.
Investors should exercise caution with Nvidia and AMD. The new restrictions are only a start. It limits the
addressable market, especially for Nvidia. The GPU giant is vulnerable. After the cryptocurrency decline,
GPU mining activity is shrinking. That is another hit to Nvidia’s revenue this year.
