Nvidia expects losses of $5.5 billion amid US restrictions on the export of AI chips to China

Nvidia has stated that it expects losses of $5.5 billion after the US restricted its ability to export artificial intelligence chips to China, causing the Silicon Valley giant’s shares to fall after trading closed, UNN reports, citing the Financial Times.

DetailsThe group said in a regulatory filing late Tuesday that the H20 chip, which is designed for the Chinese market in accordance with export controls that already prevent the sale of its most powerful chips in China, will now require a special license to sell to customers in that country.

Nvidia said the US said the move was necessary to eliminate the risk of H20 chips being used in a supercomputer in China.

The chipmaker said it would incur costs of $5.5 billion in the quarter to April 27 related to H20 chips. Its shares fell 6 percent after trading closed on Tuesday, while futures tracking the tech-heavy Nasdaq 100 fell more than 1%.

Washington’s crackdown on H20 chips is the latest example of how the US is using tariffs and other trade barriers to put pressure on Beijing, the publication writes. President Donald Trump has already increased tariffs on Chinese imports to 145 percent, although some types of consumer electronics have received temporary exemptions.

White House Press Secretary Karoline Leavitt on Tuesday called on China to strike a new trade deal with the US, saying that “the ball is in China’s court.”

The US Department of Commerce confirmed later on Tuesday that it is issuing new export licensing requirements for H20, as well as for AMD MI308 chips and equivalent chips.

“The Department of Commerce intends to act in accordance with the President’s directive to protect our national and economic security,” the representative said.

AMD is Nvidia’s closest direct competitor in the AI data center chip market. The company did not immediately respond to a request for comment.

The US actions also underscore how Nvidia, a chip developer at the heart of the AI boom, which has seen rampant growth over the past year and briefly became the world’s most valuable company, is exposed to geopolitical tensions between Washington and Beijing, the publication writes.

Nvidia also said on Monday that it will spend up to half a trillion dollars on AI infrastructure in the US over the next four years through partnerships with companies such as Taiwan’s TSMC and Foxconn.

The company unveiled its China-focused H20 processors last year after the Biden administration imposed export controls on its chips. They are less powerful than its top-of-the-line graphics processing units, or GPUs, which are in high demand by Microsoft, OpenAI, Google and Amazon.

Nvidia shares have fallen about 16 percent since the beginning of the year as of the close on Tuesday, as concerns grow about the growing race between the US and China over the infrastructure that supports AI. They have also been drawn into a broader market rout triggered by the escalating trade war, the publication writes.

Bernstein analysts said on Tuesday that H20 accounted for about $12 billion of Nvidia’s $17 billion in revenue in China, while at this stage there was no clarity on whether licenses would be issued or whether this would mean a complete “destruction” of the product line.

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