By NIU Qichang
In early Wednesday trading, server company Inspur saw a nearly 6 percent opening drop and continued diving to limit down, with a market-value loss of over 5 billion yuan (US$680 million).
According to the Securities Times, the US has tightened chip exports, with the Biden administration updating export controls for AI chips on Tuesday to prevent companies like NVIDIA from exporting to China. The new rules are set to take effect after a 30-day public consultation.
NVIDIA reported in a regulatory filing yesterday that the export controls might lead to the relocation of operations, causing a 5-percent drop in the company’s US stock yesterday.
Inspur is a global leader in IT infrastructure products and services with eight research and development centers and businesses extending to over 120 countries and regions.
Being one of the largest distributors of NVIDIA in China, Inspur emphasized in its 2022 annual report that “supply chain risk” is a prominent challenge.
In its 2023 semi-annual report, the company reiterated that the raw materials for China’s server industry are predominantly imported, and despite the current stable supply, trade tensions and geopolitics pose risks for Chinese server manufacturers.
On March 2, the U.S. Department of Commerce put 28 new Chinese businesses on its Entity List, resulting in Inspur’s loss of over 6.3 billion yuan in a single day.
Apart from Nvidia, Inspur’s procurement ratio from its largest supplier Intel further decreased in 2022. In 2022, the company’s aggregate purchases from its top five suppliers fell by a third. Purchases from Intel decreased by more than 50 percent.
In terms of performance, in the first half of 2023, Inspur’s operating income was down by more than a quarter, with net profit collapsing.
From the perspective of the secondary market, by the close Nvidia concept stocks had continued sharp declines.
