Global Tech Stock Routing is Slowed by NVIDIA Curbs and ASML Warnings

Asian technology stocks took a hit following news that Nvidia Corp. will now need a U.S. government license to export its H20 chips to China. This new restriction marks a significant escalation in the ongoing U.S.-China tech conflict and signals the expanding scope of American export controls that go beyond traditional tariffs.

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Although a temporary lift in electronics tariffs by former President Donald Trump had given tech shares a boost just days earlier, the renewed chip restrictions serve as a stark reminder of the broader and more enduring implications of the trade war between the two global powers.

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The export license requirement for Nvidia's H20 chip highlights growing U.S. concerns over China’s rapid advancement in the electronics industry. Tomo Kinoshita, global market strategist at Invesco Asset Management, noted that this policy shift appears to reflect long-term strategic thinking by the U.S., and is “likely to become a permanent policy.” He also warned that the restrictions are poised to deal a major blow to the global semiconductor supply chain, potentially disrupting operations for several key industry players.

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Nvidia responded by announcing it would record approximately $5.5 billion in related charges for the fiscal first quarter due to the new regulation. Following the announcement, Nvidia shares dropped roughly 5% in after-hours trading in the U.S.

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The news also sent ripples through Nvidia’s supply chain. In Japan, shares of Advantest Corp., a prominent semiconductor testing equipment manufacturer, fell by as much as 5.6%. South Korea’s SK Hynix Inc., a leading memory chipmaker, saw its stock decline 3.7%. Taiwan Semiconductor Manufacturing Co. (TSMC), Nvidia’s main chip fabricator, also dipped 2.9%.

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According to analyst Ken Hui, TSMC had already been expected to scale back its expansion plans due to weakening global economic conditions. These new export rules may worsen that slowdown.

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China, already facing a ban on imports of the most advanced semiconductor chips and equipment, now must also contend with restrictions on the H20 chip—a product specifically modified to avoid being classified as too advanced under previous U.S. export rules. Even though it’s not the most powerful chip available, the new license requirement effectively chokes off another pathway for Chinese firms to access critical U.S. technology.

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While there have been recent signs of Chinese progress in artificial intelligence through projects like DeepSeek, continued restrictions could hamper China’s long-term tech ambitions. Key Chinese tech giants reacted negatively to the news. Alibaba Group Holding Ltd. dropped up to 5.1% in Hong Kong trading on Wednesday, while Baidu Inc. fell 3%.

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Tim Waterer, chief market analyst at KCM Trade in Sydney, emphasized how the development underlines the ongoing fragility of Asian tech stocks amid the strained U.S.-China relationship. “There is a reliance on the H20 chip from big name players in the Asian tech space,” he said, “so any moves which could impact supply will be a drag on the broader sector.”

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Despite these challenges, China continues to push for greater technological self-reliance. Although its semiconductor industry still trails leading global firms like Nvidia in performance and innovation, domestic efforts are beginning to show results. Some Chinese hardware stocks even bucked the regional downtrend on Wednesday. Hua Hong Semiconductor Ltd. surged as much as 6.6% in Hong Kong, and Advanced Micro-Fabrication Equipment Inc. rose 1.8% in Shanghai.

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Vey-Sern Ling, a managing director at Union Bancaire Privee, argued that the ban on the H20 chip might actually fuel China’s efforts to accelerate homegrown innovation. “AI innovation in China is booming and the H20 ban would not dampen it—it may accelerate the use of China domestic chips,” he said. Ling added that while Chinese-made chips may not yet match Nvidia’s H20 in performance, that isn’t the core issue. “China has been able to develop innovative AI models despite U.S. restrictions,” he explained.

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In essence, while the U.S. is tightening control over critical tech exports to contain China’s technological rise, Beijing is doubling down on developing its own capabilities. The long-term impact of these policies could reshape the global tech landscape, creating a more fragmented and regionalized ecosystem as both countries pursue diverging paths in the semiconductor and AI sectors.

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