Nvidia shares fell sharply in OTC trading after a leak that the company is halting production of artificial intelligence chips for China following Beijing's directive to local companies to stop buying them. The fall in quotes of the main beneficiary of the AI boom in OTC markets threatens to trigger a sell-off after the opening of trading in New York on the Nasdaq exchange, where Nvidia shares are traded.

Details

Shares of Nvidia fell more than 2% in morning trading on August 22 on the 24-hour trading platform Robinhood. Their fall on the over-the-counter platform Blue Ocean during morning trading in Asia reached 1.9%, Kok Hoon Wong, head of the trading department for institutional clients at Maybank Securities, told Bloomberg.

Nvidia quotes fell after The Information published that Nvidia allegedly asked the U.S. Amkor Technology, which is packaging H20 AI chips for the Chinese market, and South Korea's Samsung Electronics, which supplies memory chips for them, to stop production. In turn, Reuters sources said that Nvidia has asked Foxconn to suspend work related to the H20.

The news casts doubt on the H20's return to the Chinese market after Washington said it was ready to issue export licenses allowing shipments of the chips to China, which were effectively banned in April, CNBC notes. A specially slowed-down version of Nvidia's advanced AI gas pedals competes in the Chinese market with high-performance chips from Huawei and Cambricon Technologies. Cambricon shares soared 17% on Aug. 22 on the Shanghai exchange. Shares of other Chinese chip makers also rose, Bloomberg reports.

Nvidia did not deny the leak. "We continually manage our supply chain to respond to market conditions," a spokesperson said in response to CNBC's request for comment.

Context

Washington recently authorized Nvidia and AMD to resume shipments of slow-motion AI chips to China on the condition that they contribute 15% of sales to the U.S. budget. However, Nvidia's Chinese customers have been pressured by Beijing to switch to domestically designed chips. Last month, authorities sent notices to major tech companies and AI developers asking them to stop using the H20. At first, it seemed like a mild injunction, CNBC notes. But it soon became known that Beijing demanded that ByteDance, Alibaba, Tencent and other companies stop ordering these chips until the inspection is completed in the interests of national security.

Nvidia wrote off $5.5 billion worth of H20 chips after the White House banned shipments to China and still has unsold inventory. CEO Jensen Huang said that the lifting of that ban by the U.S. in the summer could partially offset that loss.

This article was AI-translated and verified by a human editor

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