Nvidia (NVDA:US), as well as some other U.S.-based chipmakers, fell in early trading on Tuesday following the United States' decision to restrict the sale of chips specifically designed for the Chinese market, which Nvidia produces. 

The government announced its intention to cease shipments of more advanced artificial intelligence chips, including those designed by Nvidia, to China. This move is part of a series of measures aimed at preventing Beijing from acquiring cutting-edge U.S. technologies to bolster its military capabilities.

Nvidia shares fell 3.4% in early New York trade. The stock is up around 222% YTD.

The newly introduced rules, outlined by senior administration officials during a press briefing, expand restrictions on advanced chips and chipmaking tools, extending them to a wider range of countries, including Iran and Russia. Additionally, these rules include the blacklisting of Chinese chip designers Moore Thread and Biren.

Elsewhere, Broadcom (AVGO:US) saw a decrease of 2.2%, AMD (AM:US) fell by 1.7%, Intel (INTC:US) was down by 0.5%, Applied Materials (AMAT:US) experienced a 1.3% drop, and Lam Research (LRCX:US) saw a 0.9% decline.

In Europe, chip equipment stocks faced a similar trend, with ASML Holdings (ASML:US) falling as much as 1.8% while ASM International also experienced a 1.3% decrease. BE Semiconductor was down by 1.3%.

Congressman Michael McCaul was aggressively buying NVDA shares in August while they were trading near record highs.