Global chipmakers feel the pinch of Trump’s shifting trade policy

Global chip stocks were battered on Wednesday on fresh evidence of how US President Donald Trump’s shifting trade policy was complicating the outlook for semiconductor and computing giants, including AI pioneer Nvidia and its rival AMD.

Attempts to reorient global trade through tariffs and export curbs have started to show the effect as Nvidia warned of a $5.5 billion hit after Washington restricted exports of its AI processor tailored for China, while Dutch chip-making tools giant ASML raised doubts about its outlook.

The US restriction, which also hit the MI308 processor of Advanced Micro Devices, marked the latest blow for the AI chip trade that is losing steam after a two-year rally as tariff threats and fears over Big Tech’s spending weigh on sentiment.

Nvidia shares fell close to 6%, with the company set to lose more than $148 billion in market value. AMD fell 5.8% as it warned of a $800 million hit from the latest curb, while AI-related chip stocks, including Arm, Broadcom and Micron dropped between 2.5% and 4.6%.

“The US export restrictions on Nvidia’s H20 chips highlight the growing geopolitical uncertainty enveloping the tech and semiconductor sectors, particularly under Trump-era-style policy reversals,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.

“This unpredictability rattles businesses and investment markets, as evidenced by Nvidia’s selloff this morning and broader pressure across chip stocks.” Tightening US export curbs have in recent years made it harder for American chipmakers to tap the Chinese market, but the country remains a key source of revenue.

Nvidia drew over 13% of its sales, or about $17 billion, from China in its last financial year, although that was down from 21% in fiscal 2023. For AMD, China was its second-largest market last year, accounting for more than 24% of total sales.

“The H20 portion was about $12 billion or so (of the total China revenue), roughly about 30 cents of earnings per share, not trivial but not enormous in the grand scheme of things,” Bernstein analyst Stacy Rasgon said.

“H20 performance is low, well below already-available Chinese alternatives; a ban essentially simply hands the Chinese AI market over to Huawei.” Rasgon said the move may have surprised many investors as shares had surged nearly 18% last week, partly due to a report that the Trump administration planned to back off from such a curb after CEO Jensen Huang attended a Mar-a-Lago dinner.

The company had earlier this week unveiled plans to build AI servers worth as much as $500 billion in the US over the next four years, a move largely seen as an overture to Trump.

Trump has for now exempted semiconductors and some other electronics from his tariffs, but he has warned that sector-specific levies will be announced in the coming weeks.

Such tariffs could cost US semiconductor equipment makers more than $1 billion a year, Reuters reported on Tuesday.

News of the latest export curb on Nvidia sparked a selloff in chip companies and its suppliers across the globe.

In South Korea, Samsung closed down about 3%, while SK Hynix closed 4% lower.

European chipmakers ASM International and Infineon Technologies fell more than 2%, while Japanese chip-testing equipment maker Advantest - an Nvidia supplier - was the Nikkei’s second-worst performer with a 5% tumble.

Still, some analysts said Nvidia’s overall sales have continued to surge even as the China contribution slows while chip demand remains strong from big cloud companies.

“While we acknowledge the likely impact to near-term numbers, we would stress that Blackwell shipments to core hyperscale customers remains the driver of fundamentals,” TD Cowen analysts said, referring to Nvidia’s latest line of AI systems.

Federal Reserve Bank of Cleveland President Beth Hammack said on Wednesday that high levels of uncertainty in the US economy right now argue for the central bank to hold steady on interest rate policy and take in more information before deciding what needs to happen next.

“Given the economy’s starting point, and with both sides of our mandate expected to be under pressure, there is a strong case to hold monetary policy steady in order to balance the risks coming from further elevated inflation and a slowing labour market,” Hammack said in the text of a speech prepared for delivery before a gathering held by the Economic Club of Cleveland.

“When clarity is hard to come by, waiting for additional data will help inform the path ahead,” she noted.

Hammack, who does not hold a vote on the monetary policy- setting Federal Open Market Committee this year, said the big changes in the United States trade regime, which prominently features tariff increases, have played a role in boosting uncertainty and making it harder to know what needs to happen with central bank monetary policy.

Agencies