Nvidia shares fell 4% in prolonged buying and selling on Wednesday after the corporate stated the U.S. authorities is limiting gross sales in China.

In a submitting with the SEC, Nvidia stated the U.S. authorities informed the corporate on Aug. 26, a couple of new license requirement for future exports to China, together with Hong Kong, to cut back the chance that the merchandise could also be utilized by the Chinese language navy.

Nvidia stated the restriction would have an effect on the A100 and H100 merchandise, that are graphics processing models offered to companies.

“The license requirement additionally contains any future Nvidia built-in circuit reaching each peak efficiency and chip-to-chip I/O efficiency equal to or larger than thresholds which can be roughly equal to the A100, in addition to any system that features these circuits,” the submitting stated.

The corporate expects that it may lose $400 million in potential gross sales in China within the present quarter after beforehand forecasting income of $5.9 billion. The brand new rule additionally applies to gross sales to Russia, however Nvidia stated it does not have paying prospects there.

In recent times, the U.S. authorities has utilized rising export restrictions to chips made with U.S. expertise due to fears that Chinese language corporations may use them for navy functions or steal commerce secrets and techniques.

Nvidia stated it was making use of for a license to proceed some Chinese language exports however does not know whether or not the U.S. authorities will grant an exemption.

“We’re working with our prospects in China to fulfill their deliberate or future purchases with different merchandise and will search licenses the place replacements aren’t enough,” an Nvidia spokesperson informed CNBC. “The one present merchandise that the brand new licensing requirement applies to are A100, H100 and methods similar to DGX that embrace them.”

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