Nvidia Faces $5.5 Billion Loss amid Fresh U.S. AI Chip Export Ban to China

By Evans Momodu
Published 20:50



Nvidia takes a $5.5 billion hit after the U.S. government imposes new export restrictions on its H20 AI chips to China, escalating the ongoing U.S.-China tech war and impacting global markets.

Nvidia, the global leader in artificial intelligence chip design, is facing a massive $5.5 billion financial hit as the United States enforces tighter export controls on its H20 AI chips destined for China. This move marks a dramatic escalation in the ongoing U.S.-China tech conflict, with major repercussions for the semiconductor industry.

Designed specifically to comply with earlier U.S. export regulations, the Nvidia H20 chip had lower computing power than the now-banned H100 chip and was marketed as a compliant alternative for Chinese customers.

However, in a regulatory filing on Tuesday, Nvidia revealed that the U.S. government will now require a special export license for H20 chip shipments to China. This sudden policy reversal led the company to anticipate a $5.5 billion charge in its Q1 earnings report, scheduled for May 28, 2025. The losses stem from unsold inventory, purchase obligations, and related reserves.

Shares of Nvidia (NVDA) plunged more than 10% on Wednesday, extending losses from pre-market trading. This sharp decline reflects investor fears over U.S. trade policy unpredictability and growing barriers to revenue in the Chinese market, which accounted for 13% of Nvidia’s total sales in 2024.

Industry analysts, including Dan Ives of Wedbush Securities, view this move as a “strategic blow” to Nvidia’s growth in China.

“This disclosure is a clear sign that Nvidia now faces major restrictions in selling to Chinese customers. The Trump administration recognises Nvidia as the core driver of the global AI revolution,” Ives stated.

Nvidia’s situation highlights the broader risks of erratic trade policy, with Jay Hatfield, CEO of Infrastructure Capital Advisors, criticising the policy flip-flop:

“Nvidia designed the H20 chip specifically to meet U.S. export guidelines. Now, with the rules changing again, they’re losing billions. This inconsistency is costly for U.S. tech companies.”

The World Trade Organisation (WTO) issued a warning Wednesday, noting a sharp deterioration in global trade expectations due to mounting tariffs and growing policy uncertainty. Nvidia’s losses exemplify how deeply entangled global tech companies have become in geopolitical crossfire.
Source: CNN