US export restrictions of powerful chips to China hurt now but should prove bullish long term

US export restrictions of powerful chips to China hurt now but should prove bullish long term

NVIDIA DRIVE Thor, the company’s next-generation centralized computer for autonomous and assisted driving and in-car infotainment, is shown in a handout image obtained September 20, 2022.

Nvidia | via Reuters

It’s understandable why the US felt the need to act swiftly to keep powerful semiconductors out of the hands of the Chinese government. It’s better to make a move from a position of strength before it’s too late. However, as shareholders of chip stocks, it still hurts. As you may recall, Club holding Nvidia (NVDA) was hit particularly hard about 2½-months ago when the Biden administration restricted exports of the most advanced American-made chips to China for fear they would be co-opted for military use.

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