(Bloomberg) -- Asian technology stocks fell after Nvidia Corp. said the US government will begin requiring a license to export its H20 chips to China, an escalation of restrictions.

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After the reprieve from President Donald Trump’s tariffs for electronics that boosted tech stocks on Monday, the latest curbs are a reminder of how the US-China trade war extends beyond import taxes. The fallout could weigh on chip-sector earnings and set back China’s ambitions to compete on the global tech stage.

The move is “driven by concerns over China’s rise in the electronics sector, and in that sense, it is likely to become a permanent policy,” said Tomo Kinoshita, global market strategist at Invesco Asset Management. “It is expected to have a significant negative impact on semiconductor supply chain.”

Nvidia warned that it will report around $5.5 billion in related charges during the fiscal first quarter. Its shares slid about 5% in late US trading Tuesday.

Among key suppliers, Korean memory maker SK Hynix Inc. slumped as much as 3.8% Wednesday. Japan’s Advantest Corp. dropped as much as 7.8%, extending its fall after fellow chip-equipment maker ASML Holding NV of the Netherlands warned that tariffs are cloduing its profit outlook. Top foundry Taiwan Semiconductor Manufacturing Co. fell 2.9%.

TSMC was already likely to slow some production expansion on a weaker economic outlook, and “the tighter rules on Nvidia’s China sales might amplify the deceleration,” Bloomberg Intelligence analyst Ken Hui wrote in a note.

For China, the broader restrictions raise concerns that access to global tech hardware will be further choked off. Exports of the most-advanced chips and equipment to the Asian nation are already banned, and the H20 is a scaled-down product specifically designed not to be too powerful.

Even after DeepSeek raised hopes that advances can be made in artificial intelligence and other fields without the most cutting-edge chips, China’s tech giants may suffer if curbs keep getting extended. Alibaba Group Holding Ltd. sank as much as 5.4% in Hong Kong trading Wednesday, while Baidu Inc. fell 3.3%.

“It is a reminder of the potential susceptibility of tech stocks to the ongoing prickly relationship between the US and China regarding semiconductors,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. “There is a reliance on the H20 chip from big name players in the Asian tech space, so any moves which could impact supply will be a drag on the broader sector.”

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On the other side of the equation, China continues to work toward self-reliance in technology, though its companies are still seen lagging far behind advanced global leaders like Nvidia.

Among Chinese hardware stocks bucking the regional sector declines Wednesday, Hua Hong Semiconductor Ltd. jumped as much as 6.6% in Hong Kong while Advanced Micro-Fabrication Equipment Inc. rose 2.1% in Shanghai.

“AI innovation in China is booming and the H20 ban would not dampen it — it may accelerate the use of China domestic chips,” said Vey-Sern Ling, a managing director at Union Bancaire Privee. “Domestic AI chips may not perform as well as Nvidia’s H20, but that is missing the point. China has been able to develop innovative AI models despite US restrictions.”

--With assistance from Abhishek Vishnoi.

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