Nvidia Faces $5.5B Hit as U.S. Clamps Down on AI Chip Exports to China
Nvidia is bracing for a $5.5 billion financial hit in fees after the U.S. government tightened rules on exporting its H20 AI chips to China. The chip, designed specifically for the Chinese market to sidestep earlier restrictions, will now need a special license for export — a requirement Nvidia says will stay "in effect for the indefinite future." The U.S. believes the H20 could be used in Chinese supercomputers, even though the chip was designed to comply with previous limits.
The new restrictions deal another blow to Nvidia’s foothold in China, which had remained strong despite past crackdowns, with companies like Tencent, Alibaba, and ByteDance reportedly ramping up orders. Now, with U.S. officials adding the H20 to the export control list — alongside AMD's MI308 — and raising concerns about military and supercomputing applications, the future of those deals looks uncertain. Nvidia shares dropped around 6% after the announcement, while AMD’s also fell.
This move is the latest flashpoint in the U.S.-China tech trade war, which has seen both sides raise tariffs and tighten regulations on everything from semiconductors to consumer electronics. Nvidia, meanwhile, is pushing ahead with plans to pour up to $500 billion into U.S.-based AI server infrastructure, but experts warn the company — and the entire American chip industry — could face long-term fallout if the standoff drags on.
