Amid concerns of potential US restrictions on their access to American exports, Chinese internet giants have swiftly placed orders for microchips from Nvidia, totaling $5 billion, according to a report by the Financial Times on Wednesday.

This development coincided with the Biden administration’s announcement of a ban on US investments in critical Chinese technologies such as artificial intelligence, semiconductors, and quantum computing. The primary objective of this move is to curtail the Chinese military’s ability to leverage American technology and financial resources.

Notable companies like Alibaba, Tencent, Baidu, and Bytedance, the parent company of TikTok, have committed to purchasing processors valued at $1 billion for delivery within the current year. Additionally, they have placed orders worth $4 billion to be fulfilled in 2024. These details were shared by individuals familiar with the matter and cited by the Financial Times.

The White House justified the ban on the grounds of national security, expressing concerns that China could exploit American technological advancements to create advanced weaponry, encryption-breaking tools, and other potential threats to US interests.

In response, the Chinese foreign ministry criticized the ban as “blatant economic coercion and technological bullying,” as conveyed in a statement translated by CNBC.

Nvidia’s stock has experienced a remarkable threefold increase in value this year, with investors anticipating a pivotal role for its highly sought-after microchips in driving the AI revolution. As the top performer in the S&P 500 this year, Nvidia’s market capitalization has surged past the trillion-dollar mark.

The imposition of Biden’s ban raises the risk of further economic challenges for China, which is already grappling with sluggish growth, escalating youth unemployment, and a substantial debt burden. Adding to these concerns, the country recently reported deflation for the first time in over two years, attributed to reduced consumer spending within China.

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