Nvidia shares rise as Trump considers ending chip export curbs

Nvidia’s stock increased on May 7, 2025 following reports that the US government may revise trade restrictions on advanced AI chips.

This potential change is related to the “AI diffusion” rule, which categorizes countries into three tiers with varying export restrictions.

Bloomberg reported that the Trump administration is considering reversing the rule, originally set to take effect on May 15, 2025.

The regulation has faced criticism from major chipmakers like Nvidia and AMD, concerned about its impact on the industry.

AMD CEO Lisa Su emphasized the need for a balance between national security and supporting the US chip sector.

Nvidia CEO Jensen Huang also expressed concerns about the potential losses for American companies if they are blocked from accessing the Chinese AI market.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ History shows semiconductor trade restrictions create complex economic tradeoffs

Today’s potential policy shift mirrors past U.S. semiconductor trade conflicts, particularly the 1986 U.S.-Japan semiconductor agreement, which revealed the complicated economic impacts of such restrictions.

When the U.S. imposed export controls on Japanese dynamic random access memory (DRAM) chips in the 1980s, American computer manufacturers faced 30-40% higher chip prices compared to their European competitors, undermining their global competitiveness1.

While such policies temporarily protected domestic chip manufacturers, they simultaneously increased costs for downstream industries that relied on these components, creating economic ripple effects throughout the technology ecosystem.

AMD’s recent announcement illustrates this tradeoff in today’s context. The company expects a $1.5 billion revenue hit this year due to existing U.S. export controls, including up to $800 million from restricted chip shipments to China2.

The historical evidence suggests that industries often prosper more through innovation and adaptability than through protectionist policies, a lesson that remains relevant as the administration reconsiders the “AI diffusion” rule.

2️⃣ Export controls accelerate China’s push for semiconductor self-reliance

U.S. restrictions on advanced chip exports have intensified China’s commitment to developing domestic semiconductor capabilities, potentially undermining long-term U.S. technological advantages.