Lawmakers are weighing tougher limits on Nvidia's chip sales to China after CEO Jensen Huang admitted to an affair with a possible Chinese intelligence asset. Analysts say three export-control bills now have better odds of passing through the December defense package. Nvidia shares fell on both Monday and Tuesday.
Three bills that would restrict China's access to Nvidia chips now have a higher likelihood of becoming law through the annual defense package, according to a range of analysts. The shift follows Huang's admission that he had an extramarital affair with a possible Chinese intelligence asset. Nvidia's board has expressed confidence in him, but Democratic and Republican lawmakers are not voicing the same trust.
Nvidia shares were trading down nearly 6% on Tuesday, after falling more than 4% on Monday. The stock is in the red for the year to date, shedding almost 10%.
Odds rise for three chip bills
The measures are the Chip Security Act, the AI Overwatch Act and the Match Act. All three were part of the Senate's version of the National Defense Authorization Act but did not make it into the House version, and negotiators are now resolving the differences.
Veda Partners analysts Henrietta Treyz and Dan McCarthy put the Chip Security Act's odds at 80%, up from 60%. They gave the AI Overwatch Act a 65% chance, up from 40%, and the Match Act 60%, up from 35%.
Owen Tedford of Beacon Policy Advisors said the bills are not sure things. He believes that if something passes, it is more likely to be a watered-down version closer to what the White House has proposed.
Lawmakers press Huang for answers
President Trump on Monday expressed support for Huang and praised the company he built. Republicans have still joined Democrats in raising concerns. According to Rep. John Moolenaar, the Republican chairman of the House's China committee, speaking on CNBC: "I hope he comes forward and is transparent and divulges all this information"
Huang's closed-door hearing on Nov. 18 is set to take place before House committees focused on intelligence, foreign affairs and China. The Veda analysts said the Trump administration's own move against Nvidia has become more likely, but only slightly, with stepped-up enforcement against chip smuggling the most likely action.
Source: MarketWatch
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