Nvidia Corp (NASDAQ:NVDA), Advanced Micro Devices, Inc (NASDAQ:AMD), and a host of peer chipmakers are trading lower Wednesday amid reports of the U.S. adopting a stricter stance over China's AI ambitions.

The U.S. plans to update export controls on AI chips to limit China's access to advanced technologies with military applications.

The strong demand in China for advanced chips used on AI projects has bred a growing market for smuggled Nvidia GPUs, despite the U.S. ban.