U.S. Blocks Nvidia AI Chip Exports to China
News Desk
Islamabad: Nvidia (NVDA.O) announced Tuesday that it will take a $5.5 billion charge following new U.S. government restrictions on the export of its H20 AI chip to China a critical market for one of the company’s most in-demand products.
U.S. officials have been tightening controls on advanced chip exports to China in an effort to maintain a lead in the global AI race. In response, Nvidia had developed chips like the H20 to comply with U.S. limits while still supporting China’s growing AI sector.
However, the U.S. Commerce Department has now imposed new licensing requirements for exports of chips such as Nvidia’s H20 and AMD’s MI308, citing national security concerns. A spokesperson said the measures are part of efforts to protect U.S. economic and strategic interests.
Nvidia shares dropped about 6% in after-hours trading, while AMD’s fell around 7%. AMD has not yet commented.
The H20 chip is Nvidia’s most advanced model currently approved for sale in China and has seen strong demand from major Chinese tech firms like Tencent, Alibaba, and ByteDance. These companies have been ramping up orders to support affordable AI model training, particularly for startups like DeepSeek.
Although the H20 isn’t as powerful as Nvidia’s global flagship chips in training AI models, it performs competitively in inference — the phase where models generate outputs for users. Inference is quickly becoming the dominant use case in AI computing. Nvidia CEO Jensen Huang recently said the company is well positioned to lead this shift.
Despite its reduced compute power, the H20’s high-speed memory and chip interconnect capabilities raise concerns it could be used to build supercomputers a use case restricted under U.S. export controls since 2022.
The Institute for Progress, a D.C.-based think tank, supported the new restrictions, citing potential violations by companies like Tencent and DeepSeek, who are believed to be using H20 chips in large-scale model training.
Nvidia said the U.S. informed it on April 9 that H20 chips would now require a license for export to China, with those restrictions becoming permanent as of April 14. It remains unclear whether the U.S. will grant any of these export licenses.
The $5.5 billion charge covers inventory, purchase commitments, and reserves related to the H20 product line, Nvidia stated.
This development follows Nvidia’s announcement on Monday of plans to build up to $500 billion worth of AI servers in the U.S. over the next four years, in collaboration with partners like TSMC. The move aligns with the Trump administration’s broader initiative to promote domestic chip manufacturing.
