Nvidia’s stock dropped 2% today as tensions with Chinese authorities escalated over security risks in its chips. The company was warned to produce “convincing security proofs” to alleviate concerns among Chinese users.
China’s state-run media, People’s Daily, commented that foreign companies must comply with Chinese laws and prioritize security as a basic prerequisite for market trust. This comes after the Cyberspace Administration of China (CAC) summoned Nvidia to explain potential backdoor security risks in its H20 chips sold in China.
Nvidia denied having “backdoors” in its chips, stating that cybersecurity is crucial to their operations. The company has already been interviewed by CAC representatives.
This development is significant for Nvidia, which relies heavily on China as a key revenue source. Last month, the US Commerce Department imposed export restrictions on the chip, resulting in an estimated $15 billion loss in sales. Nvidia introduced a new AI chip designed specifically for Chinese customers to meet US export rules.
If security fears are confirmed, it could have a detrimental impact on Nvidia’s share price. Despite this, analysts remain optimistic, with 34 Buy ratings and a Strong Buy consensus on TipRanks. The highest price target is $250, implying a potential upside of 4.45%.
Source: https://www.tipranks.com/news/nvidia-stock-nvda-trembles-as-chinese-ramp-up-pressure-on-chip-security-fears