Stocks Struggle Again as Nvidia Chip Curb Warning Pops Calm

China's economy grew more than expected in the first quarter but officials warned it was facing pressure from US tariffs - AFP
China's economy grew more than expected in the first quarter but officials warned it was facing pressure from US tariffs - AFP
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Stocks Struggle Again as Nvidia Chip Curb Warning Pops Calm

China's economy grew more than expected in the first quarter but officials warned it was facing pressure from US tariffs - AFP
China's economy grew more than expected in the first quarter but officials warned it was facing pressure from US tariffs - AFP

Asian stocks swung Wednesday after Nvidia's announcement of new US licensing rules on shipments of its new chip to China rattled investor confidence already shot by Donald Trump's sweeping trade war.

After a relatively peaceful couple of days following last week's tariff-fuelled ructions, investors were once again on the defensive as a standoff between the world's top economic superpowers shows no signs of abating.

China did little to soothe worries by saying that US levies were putting pressure on its economy, which data showed expanded more than expected in the first quarter, AFP reported.

A decision by Hong Kong's postal service to stop shipping US-bound goods in response to "bullying" levies added to the unease.

Chip behemoth Nvidia said Tuesday that US officials had told the firm it must obtain licences to ship its new H20 semiconductors to China because of concerns they may be used in supercomputers there, adding the rule would last indefinitely.

The move marks the latest salvo in an increasingly nasty row that has seen Washington and Beijing hit each other with eye-watering tariffs, with the technology sector and security at the heart of the issue.

US levies on other trading partners -- despite being mostly paused -- have sent global markets into a tailspin as governments scramble to cushion themselves from the impact of the measures, with many heading to Washington for talks.

Trump has also kicked off an investigation that could see tariffs imposed on critical minerals such as rare earths that are used in a wide range of products including smartphones, wind turbines and electric vehicle motors.

"Silence is never golden -- it's just the calm before the next chaos cycle. And sure enough, the tape just got rattled again," said Stephen Innes at SPI Asset Management.

"Nvidia dropped the mic, revealing fresh export curbs on AI gear headed to China. Then came the other shoe: Trump ordering a new probe into tariffs on critical minerals. Boom -- just like that, we're back in whiplash mode.

"Welcome to the new normal: one step forward, two tariff probes back."

Nvidia said the chip measures would cost it more than $5 billion. The firm's shares tumbled around six percent in after-market trade, and its Asian suppliers were also hit.

Taiwan titan TSMC shed more than two percent, Japanese firm Advantest was off more than six percent and SK hynix in South Korea lost more than three percent.

And most broader markets retreated across Asia.

Hong Kong led losses, dropping 1.9 percent, while Tokyo, Sydney, Seoul, Taipei, Manila and Jakarta were also down.

Singapore, Mumbai, Bangkok and Wellington rose.

London fell even as UK inflation slowed more than expected in March, while Paris and Frankfurt also retreated.

A weak dollar, and an ongoing run into safe havens, saw gold spike to a fresh record high of $3,291.81.

As investors look for China and the United States to find some common ground that could ease the tensions, Trump said it was up to Beijing to come to the negotiating table.

"The ball is in China's court. China needs to make a deal with us. We don't have to make a deal with them," said a statement from the president read out by Press Secretary Karoline Leavitt at a briefing.

"There's no difference between China and any other country except they are much larger," she added.

Trump also accused China of going back on a major deal with US aviation giant Boeing -- following a Bloomberg news report that Beijing ordered airlines not to take further deliveries of the company's jets.

Shanghai stocks edged up though traders appeared mostly unfazed by news that the world's number two economy expanded much more than expected in January-March, while retail sales, a key guide of consumption, also came in above forecasts.

The reading comes after analysts said figures Monday revealing China's exports soared more than estimated in March were down to a "frontloading" of orders ahead of Trump's so-called "Liberation Day" tariffs on April 2.

"China's prospects for this year remains muted, as rising tensions with the US lead to weaker exports and investment. That chaos will keep households nervous," said Sarah Tan, and economist at Moody's Analytics.



Google Hires Windsurf Execs in $2.4 Billion Deal to Advance AI Coding Ambitions

FILE PHOTO: A Google logo is seen at a company research facility in Mountain View, California, US, May 13, 2025. REUTERS/Carlos Barria/File Photo
FILE PHOTO: A Google logo is seen at a company research facility in Mountain View, California, US, May 13, 2025. REUTERS/Carlos Barria/File Photo
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Google Hires Windsurf Execs in $2.4 Billion Deal to Advance AI Coding Ambitions

FILE PHOTO: A Google logo is seen at a company research facility in Mountain View, California, US, May 13, 2025. REUTERS/Carlos Barria/File Photo
FILE PHOTO: A Google logo is seen at a company research facility in Mountain View, California, US, May 13, 2025. REUTERS/Carlos Barria/File Photo

Alphabet's Google has hired several key staff members from AI code generation startup Windsurf, the companies announced on Friday, in a surprise move following an attempt by its rival OpenAI to acquire the startup.

Google is paying $2.4 billion in license fees as part of the deal to use some of Windsurf's technology under non-exclusive terms, according to a person familiar with the arrangement. Google will not take a stake or any controlling interest in Windsurf, the person added.

Windsurf CEO Varun Mohan, co-founder Douglas Chen, and some members of the coding tool's research and development team will join Google's DeepMind AI division, Reuters reported.

The deal followed months of discussions Windsurf was having with OpenAI to sell itself in a deal that could value it at $3 billion, highlighting the interest in the code-generation space which has emerged as one of the fastest-growing AI applications, sources familiar with the matter told Reuters in June.

OpenAI could not be immediately reached for a comment.

The former Windsurf team will focus on agentic coding initiatives at Google DeepMind, primarily working on the Gemini project.

"We're excited to welcome some top AI coding talent from Windsurf's team to Google DeepMind to advance our work in agentic coding," Google said in a statement.

The unusual deal structure marks a win for backers for Windsurf, which has raised $243 million from investors including Kleiner Perkins, Greenoaks and General Catalyst, and was last valued at $1.25 billion one year ago, according to PitchBook.

Windsurf investors will receive liquidity through the license fee and retain their stakes in the company, sources told Reuters.

'ACQUIHIRE' DEALS

Google's surprise swoop mirrors its deal in August 2024 to hire key employees from chatbot startup Character.AI.

Big Tech peers, including Microsoft, Amazon and Meta, have similarly taken to these so-called acquihire deals, which some have criticized as an attempt to evade regulatory scrutiny.

Microsoft struck a $650 million deal with Inflection AI in March 2024, to use the AI startup's models and hire its staff, while Amazon hired AI firm Adept's co-founders and some of its team last June.

Meta took a 49% stake in Scale AI in June in the biggest test yet of this increasing form of business partnerships.

Unlike acquisitions that would give the buyer a controlling stake, these deals do not require a review by US antitrust regulators. However, they could probe the deal if they believe it was structured to avoid those requirements or harm competition. Many of the deals have since become the subject of regulatory probes.

The development comes as tech giants, including Alphabet and Meta, aggressively chase high-profile acquisitions and offer multi-million-dollar pay packages to attract top talent in the race to lead the next wave of AI.

Windsurf's head of business, Jeff Wang, has been appointed its interim CEO, and Graham Moreno, vice president of global sales, will be president, effective immediately.

The majority of Windsurf's roughly 250 employees will remain with the company, which has announced plans to prioritize innovation for its enterprise clients.