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Nvidia faces $5.5 billion impact from US chip restrictions in China

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Nvidia stated it anticipates a $5.5 billion hit following US restrictions on its ability to export artificial intelligence chips to China, causing the Silicon Valley giant’s shares to decline in after-hours trading.

The group announced late Tuesday that the H20 chip, tailored for the Chinese market to comply with export controls already preventing the sale of its most powerful chips in China, will now require a specific license for sales to customers there.

Nvidia noted that the US indicated this move is necessary to address the risk of H20 chips being used “in a supercomputer in China.”

The chip manufacturer stated it would take a $5.5 billion charge related to H20 chips in the quarter ending April 27. The company’s shares fell by 6% in after-hours trading on Tuesday, while futures tracking the technology-heavy Nasdaq 100 index dropped by over 1%.

Washington’s crackdown on H20 chips is the latest instance of the US using tariffs and other trade barriers to increase pressure on Beijing. President Donald Trump raised custom duties by 145% on goods imported from China, though he granted a temporary reprieve on some consumer electronics.

White House Press Secretary Karoline Leavitt stated Tuesday that “the ball is in China’s court,” urging China to strike a new trade deal with the US.

The US Commerce Department confirmed later on Tuesday that it had issued new export license requirements for AMD’s MI308 and equivalent chips, in addition to the H20.

“The Commerce Department is committed to acting pursuant to the president’s directive to protect our national and economic security,” a spokesperson stated.

AMD is Nvidia’s closest direct competitor in the artificial intelligence data center chip market. The company did not immediately respond to a request for comment.

This move by the US underscores how Nvidia, a chip designer at the heart of the artificial intelligence boom that has seen uncontrolled growth over the past year and briefly made it the world’s most valuable company, is exposed to geopolitical tensions between Washington and Beijing.

On Monday, the Trump administration initiated a national security investigation that could lead to new tariffs on semiconductors, while avoiding immediately imposing higher taxes on chips.

The restrictions come despite Nvidia CEO Jensen Huang joining other tech executives seeking favor with Trump. Huang recently dined with Trump at the Mar-a-Lago resort and met with the president at the White House in January.

Nvidia also stated on Monday that it would spend up to half a trillion dollars on US artificial intelligence infrastructure over the next four years through partnerships with companies like Taiwan’s TSMC and Foxconn.

The company introduced the China-focused H20 processors last year after the Biden administration imposed export controls on its chips.

These processors are less powerful than the top-tier graphics processing units, or GPUs, sought after by Microsoft, OpenAI, Google, and Amazon.

Despite its lower performance, the H20 still saw solid demand in China. However, Beijing has taken steps to encourage local tech companies to use domestic chips from companies like Huawei and could freeze out Nvidia’s products with new energy efficiency rules.

Nvidia’s shares had lost approximately 16% year-to-date as of Tuesday’s close, as concerns grew about the escalating arms race between the US and China over the infrastructure powering artificial intelligence. They have also been dragged into a broader market sell-off triggered by the escalating trade war.

On Tuesday, Bernstein analysts stated that the H20 accounted for approximately $12 billion of Nvidia’s $17 billion in revenue in China, but there was no clarity at this stage on whether licenses would be granted or whether the product line would be completely “wiped out.”

The launch of Nvidia’s newest artificial intelligence chips has faltered as successive US administrations have sought ways to control the export of the technology.

The US argues that supercomputers can be used in everything from China’s development of hypersonic weapons to the modeling of nuclear weapons.

China has repeatedly accused the US of using national security tools like export controls to impede its economic development.

The “artificial intelligence proliferation” rule, implemented in the final days of the Biden administration, is set to take effect in May unless a decision is made to withdraw it by the Trump administration. This rule will impose much tighter controls on where the most powerful US chips can be exported, using a “tiered” licensing system that restricts exports to all but a handful of countries.

Last week, Republican senators wrote a letter to Commerce Secretary Howard Lutnick, urging the administration to rescind this rule, which has been met with pushback across the sector, including from Nvidia.

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US wealthy demolish multimillion-dollar mansions for land

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Wealthy buyers in the US are tearing down multimillion-dollar homes shortly after purchasing them for hundreds of millions of dollars.

According to a report by The Wall Street Journal, the trend is driven by a shortage of land in prestigious locations, particularly along coastlines.

For ultra-wealthy buyers, the prime factor has become the land’s location rather than the structure standing on it. After the acquired properties are flattened, newer, more modern homes are built on the cleared lots.

Drawing attention to the shift in the luxury real estate market, the report noted:

“The home itself, formerly the primary driver of an expensive real estate purchase, is now almost beside the point. Buyers are competing first and foremost for well-located land, situated on the ocean or a mountaintop.”

The newspaper cited moves by US billionaire William Lauder as an example. Lauder purchased the oceanfront estate of radio host Rush Limbaugh, who died in March 2023, for $155 million and had it completely demolished in July.

Lauder had previously torn down two homes situated on roughly 1.2 hectares of land along the Palm Beach coast. Having initially planned to construct his own residence on the parcel, Lauder subsequently sold the cleared plot for approximately $200 million.

Jonathan Miller, a real estate appraiser, stated that such transactions are becoming increasingly common as land prices rise.

Amid this momentum, estate agents have also begun marketing luxury homes directly as teardown lots.

Listings use artificial intelligence-generated imagery to showcase how the land would look without the structures on it.

Marketers avoid using the word “demolition” directly, resorting instead to terms such as “adaptive reuse”.

Teardown listings rise across luxury housing market

The trend is not confined to the coast and is spreading to other regions across the US.

Data from property brokerage Redfin reveals that references to demolishing buildings are becoming more frequent in sales listings.

The share of such listings exceeds 15% in the Bunker Hill Village area of Houston, while standing at 6.67% in Pimmit Hills, Virginia.

Dina Goldenteyer, a real estate agent working in Miami, remarked that serial demolitions have become more frequent because buyers no longer appreciate homes older than a decade.

Former retail executives Jamie Dooley and Christine Scott spent $3.7 million in 2020 to demolish a seaside home near Destin, Florida.

Although the couple spent five years building a modern home on the cleared site, they listed the resulting new structure with a demolition condition, citing the fact that no one wanted to buy the property as it stood.

William Paddock, an employee at the environmental consultancy WAP Sustainability, pointed to the environmental damage caused by this construction cycle.

Paddock emphasized that tearing down a home of roughly 1,000 square metres and replacing it with a new building of approximately 2,700 square metres generates a carbon footprint equivalent to the annual emissions of an average 250 American households.

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US inflation reaches 3.7% as midterm election campaign intensifies

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An uptick in September inflation as the US midterm elections approach has pushed the cost-of-living debate back to the centre of the agenda for Democrats seeking to regain control of Congress from Republicans.

Annual inflation stood at 3.7% in September, according to the Consumer Price Index published by the Bureau of Labour Statistics, with energy, petrol, and electricity costs rising on a monthly basis.

Food prices remained flat from August to September, recording a 2.5% increase compared with the same period last year.

Democrats are anchoring their election campaigns to pledges of easing the cost of living, blaming the price increases on President Donald Trump’s tariffs and the war with Iran.

Trump and Republicans, pointing to the numerous left-wing candidates who won primary elections this year, contend that the opposition has become captive to “communists” within the party.

When annual inflation stood at 2.4% in February, the US and Israel launched the Iran war on the final day of that month, and prices continued to climb throughout the conflict.

The recent acceleration has not entirely reversed the retreat from the 40-year peak of 9.1% recorded in June 2022; however, the rate has remained above the Federal Reserve’s 2% target for over five years.

Fed policymakers raised the benchmark interest rate by a quarter of a percentage point last month, citing the battle against stubborn inflation. Officials will convene again next week to consider whether to raise rates or hold them within the 3.75% to 4% target range.

Energy and fuel record sharpest increase since first month of war

In September, energy prices posted their largest monthly jump since March, the first full month of the war with Iran, climbing 20.4% year-on-year. Energy costs had risen 2.1% from July to August, after falling 1.5% from June to July and 5.7% from May to June.

Recent escalations in Iranian attacks on oil tankers in the Strait of Hormuz, alongside more frequent strikes by Ukrainian forces against Russian refineries, have strained global crude oil and refined product markets, driving up US petrol and diesel prices.

Petrol prices also recorded their sharpest monthly increase since the first month of the war, climbing 9.1% from August to September, bringing the annual increase to 35.3%.

American Automobile Association (AAA) data shows the average price of regular petrol across the US stands at $4.26 per gallon; while below the level of roughly $4.48 recorded a month ago, it remains more than $1.20 higher than a year earlier. Average gallon prices exceed $6 in California and $5 in both Washington state and Nevada.

Electricity prices rose 0.2% from August to September, offsetting the 0.2% decline between July and August, and were up 4.4% year-on-year.

Heavy power demand from new data centres is feeding through into local household electricity bills. Trump argued that companies must cover the cost of the electricity required by their data centres themselves.

In a post on Truth Social, Trump claimed that he was requiring large data centres to generate their own power and feed the surplus back into the local grid, suggesting this could bring about “a major drop” in electricity prices.

Used vehicle market posts monthly rise as food costs stabilise

The cost of food at home fell 0.1% month-on-month in September, while dining out increased 0.2%.

Egg prices dropped to $2.27 a dozen, falling roughly 35% compared with September 2025 and remaining well below the 20-year peak of $6.23 recorded in March 2025.

Ground beef prices rose roughly 2.4% compared with September 2025, but at $6.48 a pound, they remained below the 20-year high of $6.98 reached in June.

Chicken held steady at its year-earlier level of $2.06 per pound last month, having fluctuated between $2.01 and $2.09 since November 2024.

Used car and truck prices fell 1.5% compared with September 2025, but rose 0.7% month-on-month in September following 0.4% increases in both July and August.

Heather Long, chief economist at Navy Federal Credit Union, noted that the sector faces severe pressure stemming from a combination of expensive replacement parts and a shortage of skilled labour.

Speaking to The Hill, Long emphasised that every cost pressure across the market is being felt directly at local auto repair shops.

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Anthropic posts $80.7bn loss ahead of IPO as computing costs soar

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Anthropic, developer of the artificial intelligence model Claude, reported a net loss of $80.7 billion for the first six months of 2026 ending 30 June.

According to a report by The Wall Street Journal citing the company’s draft initial public offering prospectus, this recorded loss nearly doubled the $42 billion loss incurred across the entirety of 2025.

The vast majority of that enormous figure, accounting for $72 billion, stemmed from accounting-driven book-value write-downs.

In contrast, the company saw a sharp surge in revenue, with turnover in the first half of the year climbing to $16.3 billion from $1.1 billion in the same period of the prior year.

During this period, Anthropic spent approximately $9 billion on computing power and infrastructure needs, surpassing in just six months the $7.3 billion spent across the whole of 2025.

The company has commitments to pay roughly $450 billion over the next seven to 10 years under cloud service contracts.

Under these obligations, contracts are planned for $111 billion with Google Cloud, $110 billion with Amazon Web Services, and $31 billion with Microsoft.

Anthropic will also spend up to $86 billion by 2033 and 2034, respectively, to lease Nvidia chips through smaller AI-focused cloud providers Nscale and Lambda.

The company could spend an additional $750 billion in the coming years to expand its computing capacity.

Roughly a third of the draft IPO prospectus was dedicated directly to risk factors.

The document highlighted the possibility that models could cause tangible real-world harm, noting that artificial intelligence could exhibit a “self-preservation” tendency and produce responses resembling “blackmail”.

Anthropic warned that the scale of damage caused by an AI-driven “catastrophic event” could render insuring against such risks impossible.

According to market expectations, Anthropic’s IPO could rank among the largest transactions in history, potentially surpassing SpaceX’s record.

Following the market debut, the company’s market valuation is projected to reach up to $2 trillion.

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