"Almost immediately after those controls were implemented, Nvidia began designing chips that would come as close as possible to U.S. limits while still being legal to sell in China." https://t.co/BWyuWxMA1W
— Ryan Evans (@EvansRyan202) April 15, 2025
Nvidia announced it will take a $5.5 billion financial hit after Washington placed fresh restrictions on the export of its H20 artificial intelligence (AI) chips to China. The news prompted a drop in Nvidia’s shares. The H20 chip, released last year, was designed to meet stringent US export controls to China, allowing Nvidia to continue its market presence in the country.
🇺🇸🇨🇳 Nvidia faces $5.5 billion charge as US restricts chip sales to #China – Reutershttps://t.co/lQ04yQiX80
— Christophe Barraud🛢🐳 (@C_Barraud) April 16, 2025
The chip has less computing power than the H100 AI chip but has played a significant role in China’s AI advancements, notably aiding DeepSeek in developing its ChatGPT-like reasoning AI model, R1. The restricted chip’s success had previously stirred significant AI innovation in China. Last week, Nvidia was informed by the US government that the H20 chips would now require a special license for export to China.
This led Nvidia to report approximately $5.5 billion in charges for the first quarter, associated with H20 products. Consequently, Nvidia’s shares were 5% lower in pre-market trading.
Nvidia’s CEO appears to have convinced Trump to let it keep selling valuable AI chips to China, but that could put the US and Europe on the back foot, @parmy writes https://t.co/YKuFxrdPrT via @opinion
— Angela Zhang (@AngelaZhangHK) April 14, 2025
Analysts at Wedbush Securities, led by Dan Ives, termed the financial impact as relatively small but highlighted the strategic blow to Nvidia’s engagement with Chinese customers.
The new restrictions are seen as a clear sign of mounting obstacles for Nvidia owing to US government policies aimed at curbing China’s use of American technology for advancing its AI and military capabilities.
Nvidia’s constrained China market outlook
The US Commerce Department confirmed it was issuing new export licensing requirements for Nvidia’s H20 and other American AI chips, including AMD’s MI308 chips.
This move is part of a broader strategy to safeguard national and economic security. The Trump administration’s curbs on the H20 chips were anticipated by industry watchers, especially after DeepSeek’s R1 model spurred significant AI developments and investments in China. Despite China’s efforts to produce its own AI chips, such as those by Huawei and Cambroon, Nvidia’s chips continue to outperform in terms of software maturity and ecosystem support.
With the ongoing trade tensions between the US and China, analysts predict more trade restrictions may be forthcoming. In 2022, US President Joe Biden started curbing the sale of advanced semiconductors to China, citing concerns over their use in military applications. These controls have now expanded to include various technologies and aim to limit China’s technological advancements.
Nvidia has voiced strong opposition to these restrictions, arguing that they jeopardize global innovation and economic growth. Ned Finkle, Nvidia’s vice president of government affairs, stated that the adoption of AI fuels growth and opportunities worldwide, but restrictive policies threaten to derail this progress. As the US-China trade war continues, Nvidia and other tech giants will likely face increasing challenges in conducting business with Chinese firms.
The coming months will reveal how these restrictions impact the global tech industry and international relations.
