After China's decision to limit exports of important minerals vital to semiconductor manufacture, including gallium and germanium, Nvidia (NVDA, Financials) risks possible supply chain interruptions and increased prices. For now, NVDA stock is not showing any signs of harm following the news, shares are up 0.5% at press time.
China has put limits on gallium, germanium, and antimony exports— minerals needed for semiconductor manufacture. From military technology to chip production, these materials find usage in everything even renewable energy. For graphite, used in battery manufacture, the government also instituted tougher export evaluations.
Government figures show China provides 59.2% of germanium, 98.8% of the worldwide gallium market, and 48% of antimony. The fresh restrictions are seen as a reaction to U.S. export curbs on semiconductor technology, which include prohibitions on the sale of sophisticated artificial intelligence devices to China.
As it looks for other sources, Nvidia—which depends on these ingredients for chip manufacture—may have higher procurement prices and logistical delays. The limitations overlay on current U.S. policies prohibiting Nvidia from exporting its high-performance GPUs—including the A100 and H100 models—to China. Furthermore forbidden under the new U.S. regulations are custom chips created for the Chinese market, including the H800.
Together, the export prohibition and regulatory limits lower Nvidia's addressable market in China, a major source of income. Limited supplies might also result in more production expenses, therefore influencing profit margins.
The constraints are projected to cause supply chain problems and higher prices for the semiconductor business and other industries depending on these minerals, including military and renewable energy. The circumstances draw attention to rising conflicts between the United States and China over resources and technology.
