Nvidia has announced a possible financial charge of $5.5 billion following the U.S. government’s decision to restrict exports of its H20 artificial intelligence chips to China, a significant market for these components.
The share price of Nvidia fell 6% during after-hours trading.
The U.S. aims to maintain its competitive edge in the AI industry by imposing export controls on advanced technology, preventing these cutting-edge chips from reaching Chinese shores.
On the back of these restrictions, Nvidia has been working meticulously to engineer chips that marginally escape U.S. export limits.
Nvidia’s H20 chip represents the pinnacle of its offerings available in China, a crucial asset as it engages with the country’s thriving AI industry.
Prominent Chinese firms like Tencent, Alibaba, and ByteDance previously increased orders for these chips to meet the surging demand from AI startup DeepSeek.
Although slower in training AI models compared to chips available elsewhere, the H20 holds a competitive edge in inference tasks, which are increasingly dominating the AI chip market, a development that Nvidia’s CEO, Jensen Huang, has claimed positions the company to lead this market transition.
Nevertheless, the U.S. government has spotlighted the H20’s potential use in supercomputer construction as too risky, noting its superior memory and connectivity features.
Such capabilities are subject to stringent controls, as regulated by policies since 2022. The Institute for Progress, a Washington D.C.-based nonpartisan think tank, raised concerns over this, indicating possible breaches in current export regulations by companies like Tencent.
Informed by the government that the H20 would need an export license as of April, Nvidia now confronts uncertainty over the issuance of such licenses. While Nvidia refrained from elaborating beyond its official statement, and pertinent responses from the U.S. Department of Commerce remains pending. The limit also applies to AMD as well.
Simultaneously, Nvidia stated plans to invest up to $500 billion in AI server infrastructure within the United States, partnering with entities such as TSMC. Additionally, the U.S. President Donald Trump announced in his post on Truth Social that Nvidia will be promptly receiving all necessary permits for the project.
