U.S. Trade Policy Switch Threatens Global Chip Sector Stability

Global chip stocks plummeted as the U.S. imposed restrictions affecting AI pioneers Nvidia and AMD, highlighting uncertainties in the semiconductor market. The export curb, echoing Trump-era policies, may hand the Chinese AI market to local firms like Huawei. While U.S. sales plans continue, geopolitical tensions cast a shadow.

On Wednesday, global chip stocks experienced a significant downturn in response to the U.S. administration's new export restrictions. These policies, reminiscent of Donald Trump's trade strategies, are affecting the semiconductor market's future, notably impacting giants Nvidia and AMD. Market sentiment was hit hard as tariff threats loom over big tech spending priorities.

Nvidia disclosed a potential $5.5 billion revenue impact due to the U.S. export ban on its AI processors to China, proving the substantial effect of these trade restrictions. Simultaneously, AMD's MI308 processor faced similar export blows, leading the company to anticipate a $800 million deficit. Such moves appear to benefit local Chinese firms, with Huawei poised to seize market opportunities.

Despite the current market instability, analysts believe that Nvidia's overall sales strength and demand from cloud companies remain robust. However, looming U.S. tariffs on semiconductors threaten further economic impacts, putting additional pressure on an already tense geopolitical trading environment.

(With inputs from agencies.)