Nvidia expects $5.5 billion hit as US restricts chip sales to China
Nvidia said the US government informed the chipmaker that the H20 chip needs a permit to be sold to China. The license requirement for H20 chips would be in effect “for the indefinite future.”
Chipmaking giant Nvidia said it would be hit with USD 5.5 billion in costs after the Trump administration tightened export rules to China.
According to new rules issued by the US government, Nvidia will reportedly require licenses to export its popular H20 AI chip to China.
The rules come amid a growing trade war between the US and China, with the world’s two largest economies introducing tit-for-tat steep tariffs on each other.
The semiconductor giant said the US government told it last week that the H20 chip needs a permit to be sold to China and Hong Kong. Nvidia said US officials informed it that the license requirement for H20 chips would be in effect “for the indefinite future.”
“The [government] indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China,” Nvidia said, as reported by the BBC.
The news comes a day after Nvidia announced that it would spend hundreds of millions of dollars over the next four years making AI chips in the US.
Nvidia will take a USD 5.5 billion charge against its revenue in the current quarter because of H20 inventory, purchase commitments and related reserves, which it won’t be able to sell or fulfill in the wake of the government’s new rule, the company said, according to the New York Times.
The Trump administration is issuing new export licensing requirements for chips such as the H20 and AMD’s MI308, the US Commerce Department said.
“The Commerce Department is committed to acting on the president’s directive to safeguard our national and economic security,” Benno Kass, a spokesperson for the Commerce Department, said.
In 2022, the Biden administration curbed the export of Nvidia’s leading AI chips to China. In response, Nvidia modified one of its top AI chips, the H100, and the resultant H20 chip became a China-specific product.
China is Nvidia’s fourth-largest region by sales, after the US, Singapore, and Taiwan. More than half of its sales went to American companies in its last fiscal year.
