Nvidia (NVDA) shares fell 2% in pre-market trading on Wednesday, as renewed chip export concerns rattled investors. The drop followed the White House’s latest move to expand its trade blacklist, adding multiple Chinese companies, including Inspur Group, China’s largest server manufacturer and a key Nvidia customer. The move has sparked fears that further restrictions could impact Nvidia’s revenue from China, one of its largest markets.

The chip giant is caught in the crossfire between U.S. and Chinese regulators. In the U.S., Trump’s 20% tariffs on Chinese imports are pushing companies to shift away from China, potentially affecting Nvidia’s supply chain and sales. Meanwhile, China’s government is retaliating, discouraging local firms from using Nvidia’s H20 chip—a version of its AI processor modified to comply with U.S. export rules. Instead, Beijing is prioritizing domestic semiconductor development, which could further squeeze Nvidia’s market share in China.

The escalating chip war adds another layer of uncertainty to Nvidia’s global strategy. While the company has seen booming demand for its AI-powered GPUs, China accounted for roughly 20% of its data center revenue in recent quarters. If U.S. restrictions tighten further, Nvidia may face limited options for maintaining its China business, potentially leading to a revenue hit.

Despite short-term volatility, analysts remain cautiously optimistic about Nvidia’s long-term prospects. The AI-driven semiconductor market continues to expand, with demand from cloud computing, data centers, and AI applications offsetting geopolitical headwinds. However, investors will closely watch for further regulatory actions and how Nvidia navigates the geopolitical storm in the months ahead.