Nvidia, the world’s most valuable chipmaker, fell more than 3 percent in after-hours trading after reports emerged of additional restrictions on AI chip sales in China. These potential restrictions could have a significant impact on sales in the world’s largest semiconductor market.

China is a significant market for Nvidia, accounting for about a fifth of its revenue. Washington’s new policy aimed at closing loopholes that allow the sale of high-performance AI chips could drastically change this situation.

The new wave of restrictions is another reflection of the Biden administration’s efforts to curb China’s technological advance. The concerns of the United States are directed in particular at Beijing’s technological ambitions in the area of artificial intelligence, which includes military and scientific applications and could upset the geopolitical balance.

But despite the current challenges, Nvidia and its rival AMD remain at the forefront of developing chips needed for generative AI models are essential. From large companies like Microsoft and Baidu to smaller developers like OpenAI, their products are in demand and continue to drive AI development.

• The new regulations could also affect cloud services used by Chinese AI companies for modeling. Such a restriction could create further difficulties for giants like Amazon.com and Microsoft.

However, it remains to be seen how strong the long-term effects of these regulations will actually be. Robert Lea, analyst at Bloomberg Intelligence, cautions: “Chinese AI firms may also be able to source specialized AI chips from third countries. So I think it will be difficult for the US to enforce the regulations.”