Nvidia suffers $10 billion loss due to sanctions, 3 ETFs to watch – Advanced Micro Devices (NASDAQ:AMD), Amazon.com (NASDAQ:AMZN)

The U.S. semiconductor sector is facing tough times, with the possibility of further sanctions on exports of artificial intelligence chips to China looming.

What happened: NVIDIA NVDA The company recently suffered a bitter blow after a major tech customer postponed a multibillion-dollar order.

As geopolitics shakes up the industry, investors are keeping an eye on the impact on exchange-traded funds (ETFs) related to the sector. We will introduce three ETFs that are attracting particular attention among the many ETFs available.

VanEck Semiconductor ETF SMH: This ETF’s top holdings include Nvidia, Broadcom AVGOTaiwan Semiconductor Manufacturing Company TSM and advanced microdevices AMD. The companies are deeply involved in AI chip production and data center infrastructure. This makes ETFs particularly vulnerable to regulatory changes in this area. iShares Semiconductor ETF socks: This ETF boasts holdings in Nvidia and Intel. INTCBroadcom. Potential export restrictions could disrupt these companies’ revenue streams, which of course could cause a ripple in ETF performance. SPDR S&P Semiconductor ETF XSD: This ETF has an equal-weighted structure that spreads exposure across semiconductor companies. Significant allocations to Nvidia, AMD and Micron Technology Mu They will be subject to export controls.

Also read: What’s going on with Marvell Technology (MRVL) stock?

Nvidia faces a double whammy

The Biden administration is reportedly considering new sanctions in the coming days. Bloomberg reports that the new sanctions could include a three-tier framework targeting exports of AI chips, aimed at restricting access to China’s advanced technology. These restrictions could take effect before Donald Trump takes office on January 20th.

Nvidia, a dominant player in the sector, faces a double predicament. In addition to potential export restrictions, Nvidia’s hyperscaler customers — Microsoft MSFTAmazon’s AMZN AWS, Alphabet googlemeta meta — Recently, $10 billion worth of orders for Blackwell GB200 data center racks were postponed due to overheating issues. As reported by Reuters, Davidson prosecutor Gil Luria said up to 50% of the company’s chips could be shipped to markets that could fall under the new export rules. This disruption adds to the challenges facing Nvidia.

“Geopolitical tensions, particularly between the United States and China, are having a significant impact on the semiconductor industry,” said Defiance ETF CEO Sylvia Jablonski. Every time we hear a report from the White House about a possible US semiconductor ban, we’ve seen NVDA and all the other semiconductor stocks fall. ”

Long-term outlook for ETFs

While the short-term outlook for semiconductor ETFs remains uncertain, the long-term outlook presents significant opportunities. Advances in AI, quantum computing, and other technologies are expected to significantly increase demand for cutting-edge semiconductors. Despite geopolitical headwinds, semiconductor-focused ETFs could benefit from ongoing innovation and market growth.

Summarizing the sector’s potential, Jablonski said, “Any high-tech, innovative trend comes with risks and rewards. We need to understand that it will be stable. But with innovations like AI, once quantum computing becomes a reality, the opportunities for investors are endless!”

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