Biden Unveils New Chip Regulations, Plummeting Stocks

President Joe Biden, in his final week of office, has instituted an array of new protocols regulating the export of chips and processors, causing a stock market-frenzy to ensue throughout the day.

The White House announced on Monday that they would be setting quotas on the number of chips that could be sent for sale outside of the country from domestic producers, mainly for trades made without a special type of federally-mandated license. These regulations apply to GPU's (Graphics Processing Units), which make up a key component to almost every computer's hardware capabilities. Additionally, it is by far one of the greatest revenue producers of any chip, only behind the even more crucial CPU's (Central Processing Units).

These regulations will especially hurt big orders, mainly those with 1701+ units being sold at once. This means that smaller chipmakers that make only small trade orders will receive little to no impact, while bigger chipmakers that sell these chips en masse like Broadcom or Nvidia will need to pay a heavy price.

Even worse, these regulations apply to 24 countries, ranging from Russia to China to North Korea, which have an outright ban on chip exports entirely due to strategic threats to the United States. The only countries protected from this regulation are the top 18 or so allies of the U.S., most from NATO or the Indo-Pacific accords, like Taiwan and the United Kingdom.

With these regulations impacting exports to all emerging markets, as well as most large markets across the world, it is clear that chipmakers will face the ultimate price in terms of both sales and global reach. Nvidia, Palantir, Google and others, all of which rely on the export of chips or their software platforms, all plummeted on Monday, continuing the generally bear trend in the Nasdaq from last week. It is unclear how the next Trump administration will react to this, but with some inference, we may assume that the incoming president might, in his "America First" strategy, lift the restrictions to promote domestic profits. Yet, only time will tell.