Nvidia Inc. , the artificial intelligence powerhouse led by Jensen Huang is pushing back against new semiconductor export regulations imposed by President Joe Biden‘s administration.

What Happened: The Commerce Department’s fresh 168-page rule aims to control the global flow of graphics processing units, a key area where Nvidia ( NVDA ) dominates with an estimated 90% market share. While the restrictions target national security, critics, including Nvidia ( NVDA ), argue the move could stifle AI innovation.

Nvidia’s response, however, reflects concerns about the broader economic impact. “This rule threatens to derail innovation and economic growth worldwide,” said Nvidia's ( NVDA ) VP of government affairs, Ned Finkle, in a statement. The company has previously tailored products to meet regulatory changes, creating a less powerful chip for the Chinese market in 2022.

The regulations, unveiled on Monday, classify countries into three categories for GPU export controls. While 18 U.S. allies, including the UK and Japan, will have unrestricted access, the most advanced GPUs will be prohibited from reaching countries like China, Russia, and Iran. The remaining nations face caps on GPU exports, with larger orders requiring U.S. government approval.

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Why It Matters: Experts remain divided on the potential consequences. Chris Miller, a semiconductor industry expert, suggests that while Nvidia ( NVDA ) may face reduced demand from certain countries, the high demand for its products could mitigate the impact, reported Business Insider on Monday.

Still, others argue the rule could push global AI infrastructure development toward U.S. firms, with the Middle East and other regions excluded from the free-flowing GPU access.

The Biden administration cites national security concerns, warning that advanced AI technology could fuel mass surveillance and weapon development.

Supporters of the policy, including some Republicans, believe these controls are essential to counter China’s growing AI capabilities. The regulations, subject to a 120-day comment period, are expected to take effect under President-elect Donald Trump‘s administration, raising questions about their long-term effectiveness.

Price Action: Nvidia ( NVDA ) stock closed at $133.23 on Monday, down 1.97% for the day. In after-hours trading, the stock surged by 1.28%. Over the past year, Nvidia's ( NVDA ) stock has surged by 136.31%, according to data from Benzinga Pro.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.