Nvidia has announced that it expects to take a $5.5 billion financial hit after the US government tightened restrictions on the company’s ability to export artificial intelligence (AI) chips to China. The move comes as part of ongoing efforts by the Trump administration to limit China’s access to advanced technology amid escalating trade tensions between the two nations.
In a regulatory filing late on Tuesday, Nvidia revealed that its H20 chip, which had already been tailored to meet previous export control requirements, will now require a special license to be sold in China. The company had previously been restricted from selling its most powerful chips in China, but the new measures extend to the H20 chip, a product designed to comply with existing export controls.
The US government cited concerns over the potential use of the H20 chip in supercomputers in China, raising national security risks. In response, Nvidia stated that it would take a $5.5 billion charge for the quarter ending on April 27, 2025, related to inventory, purchase commitments, and reserves associated with the H20 products.
As a result of the announcement, Nvidia shares dropped 4% in after-hours trading on Tuesday, reflecting the market’s reaction to the expected financial loss.
This move marks the latest example of the Trump administration’s strategy of employing tariffs and other trade barriers to exert pressure on Beijing. The US president has already increased tariffs on Chinese imports to 145%, although certain consumer electronics have been granted temporary exemptions.
The tightened export controls further escalate the trade conflict between the US and China, as both nations continue to vie for dominance in the rapidly evolving AI and semiconductor sectors. Nvidia, which has long been a key player in AI chip development, now faces significant challenges in maintaining its position in the lucrative Chinese market.
