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\u2019s shares to decline in after-hours trading.<\/p>\n
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.<\/p>\n
Nvidia noted that the US indicated this move is necessary to address the risk of H20 chips being used “in a supercomputer in China.”<\/p>\n
The chip manufacturer stated it would take a $5.5 billion charge related to H20 chips in the quarter ending April 27. The company\u2019s shares fell by 6% in after-hours trading on Tuesday, while futures tracking the technology-heavy Nasdaq 100 index dropped by over 1%.<\/p>\n
Washington\u2019s 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<\/em> by 145% on goods imported from China, though he granted a temporary reprieve on some consumer electronics.<\/p>\n White House Press Secretary Karoline Leavitt stated Tuesday that “the ball is in China\u2019s court,” urging China to strike a new trade deal with the US.<\/p>\n The US Commerce Department confirmed later on Tuesday that it had issued new export license requirements for AMD\u2019s MI308 and equivalent chips, in addition to the H20.<\/p>\n “The Commerce Department is committed to acting pursuant to the president\u2019s directive to protect our national and economic security,” a spokesperson stated.<\/p>\n AMD is Nvidia\u2019s closest direct competitor in the artificial intelligence data center chip market. The company did not immediately respond to a request for comment.<\/p>\n 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\u2019s most valuable company, is exposed to geopolitical tensions between Washington and Beijing.<\/p>\n On Monday, the Trump administration initiated a national security investigation that could lead to new tariffs<\/em> on semiconductors, while avoiding immediately imposing higher taxes on chips.<\/p>\n 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.<\/p>\n 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\u2019s TSMC and Foxconn.<\/p>\n The company introduced the China-focused H20 processors last year after the Biden administration imposed export controls on its chips.<\/p>\n These processors are less powerful than the top-tier graphics processing units, or GPUs, sought after by Microsoft, OpenAI, Google, and Amazon.<\/p>\n 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\u2019s products with new energy efficiency rules.<\/p>\n Nvidia\u2019s shares had lost approximately 16% year-to-date as of Tuesday\u2019s 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.<\/p>\n On Tuesday, Bernstein analysts stated that the H20 accounted for approximately $12 billion of Nvidia\u2019s $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.”<\/p>\n The launch of Nvidia\u2019s newest artificial intelligence chips has faltered as successive US administrations have sought ways to control the export of the technology.<\/p>\n The US argues that supercomputers can be used in everything from China\u2019s development of hypersonic weapons to the modeling of nuclear weapons.<\/p>\n China has repeatedly accused the US of using national security tools like export controls to impede its economic development.<\/p>\n 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.<\/p>\n 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.<\/p>\n","protected":false},"excerpt":{"rendered":" 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\u2019s 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 […]<\/p>\n","protected":false},"author":1,"featured_media":8973,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[176],"tags":[9210,3873,1454,529,319,5907,6493,9212,8445,887,7337,983,2130,6405,9213,2360,2087,787,1963,9209,9211],"class_list":["post-8972","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-america","tag-amd-mi308","tag-artificial-intelligence-chips","tag-biden-administration","tag-china","tag-donald-trump","tag-export-controls","tag-foxconn","tag-gpus","tag-h20-chip","tag-huawei","tag-jensen-huang","tag-national-security","tag-nvidia","tag-semiconductors","tag-supercomputers","tag-tariffs","tag-technology","tag-trade-war","tag-tsmc","tag-us-chip-restrictions","tag-us-commerce-department"],"yoast_head":"\n