According to a report by the Wall Street Journal, the United States is contemplating implementing fresh limitations on the export of AI chips to China.

 On June 27, according to sources familiar with the matter, the Wall Street Journal reported that the United States is contemplating imposing additional export restrictions on artificial intelligence chips to China. Following this news, Nvidia's shares (NVDA.O) experienced a decline of over 2%, while Advanced Micro Devices (AMD) (AMD.O) saw a decrease of approximately 1.5% in after-hours trading.

Flags of China and U.S. are displayed on a printed circuit board with semiconductor chips, in this illustration picture taken February 17, 2023. 

The report states that the Commerce Department plans to halt shipments of chips produced by Nvidia and other chip companies to Chinese customers, potentially commencing as early as July.

U.S. chipmakers, including Nvidia, Micron, and AMD, find themselves caught in the crossfire between China and the Biden administration.

Last year, in response to requests from U.S. officials, Nvidia announced that it would halt exports of two high-performance computing chips used in artificial intelligence work to China.

In an effort to comply with export control regulations, Nvidia subsequently developed a new advanced chip called the A800 specifically for the Chinese market. Additionally, the company made modifications to its flagship H100 chip earlier this year to ensure regulatory compliance.

However, the U.S. Department of Commerce is now considering imposing further restrictions that would prohibit the sale of even the A800 chips without a special export license, as per the report.

At the time of reporting, the Commerce Department had not provided a response to Reuters' request for comment.