Nvidia, the leading AI chip manufacturer, has announced a projected financial hit of $5.5 billion following new US government restrictions on the export of its H20 AI chips to China. The move is part of Washington’s broader effort to curb China’s access to advanced semiconductor technology, citing national security concerns.
The US government has been tightening regulations on AI chip exports to China, aiming to prevent the use of high-performance chips in military-grade supercomputers. Nvidia’s H20 chip, specifically designed to comply with previous export restrictions, has now been flagged for its high-speed memory connectivity, which officials believe could be leveraged for supercomputing applications.
Nvidia disclosed in a regulatory filing that the licensing requirement for H20 chip exports was communicated on April 9, with confirmation on April 14 that the restrictions would remain indefinitely. As a result, Nvidia has been forced to write down billions in inventory and contractual obligations, leading to a 6% drop in its stock value in after-hours trading.
China has been a key market for Nvidia, contributing 13% of its total revenue in 2023, down from 20% in 2022 due to earlier US-imposed restrictions. With the latest ban, analysts predict that Chinese firms will shift to domestic alternatives, such as Huawei, which has been ramping up AI chip production.
The restriction comes amid growing tensions between the US and China over technology dominance. Nvidia had recently pledged a $500 billion investment in US-based AI infrastructure, aligning with Washington’s push for domestic semiconductor manufacturing. However, the latest export controls signal a continued crackdown on AI chip sales to China.
Nvidia is now focusing on its next-generation Blackwell-series AI chips, while Chinese firms like DeepSeek are developing AI models using alternative hardware. The long-term impact of these restrictions remains uncertain, but experts warn that China’s push for semiconductor independence could accelerate, potentially reducing US influence in the global AI race.
