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Nvidia says it is expected to hit $5.5 billion when it closes its US ability to export artificial intelligence chips to China, with stocks in the Silicon Valley giant sliding in after-hours trading.
The group said in a regulatory submission late Tuesday that H20 chips tailored for the Chinese market will require special licenses to sell to customers in order to comply with export controls that have already prevented the sale of China’s most powerful chips.
Nvidia said the US has said this move is necessary to address the risk of H20 chips being used in “Chinese supercomputers.”
The chip maker said there will be a $5.5 billion fee for the quarter ending April 27th related to H20 chips. Its stock fell 6% in after-hours trading on Tuesday, but futures tracking the tech-centric NASDAQ 100 index fell more than 1%.
Washington’s crackdown on H20 chips is the latest example of how the US is using tariffs and other trade barriers to increase pressure on Beijing. President Donald Trump has already increased tariffs on Chinese imports to 145%, but some home appliances have been given a temporary reprieve.
White House Press Secretary Caroline Leavitt on Tuesday urged China to cut its new trade contract with the US, saying “The ball is in Chinese courts.”
The US Department of Commerce confirmed later Tuesday that it was issuing new export licensing requirements for H20 and AMD MI308 and comparable chips.
“The Commerce Department is committed to acting on the President’s orders to protect our national and economic security,” the spokesperson said.
AMD is Nvidia’s closest direct competitor in the AI data center chip market. The company did not immediately respond to requests for comment.
The US move also highlights that Nvidia, a chip designer at the heart of the AI boom, has temporarily become the world’s most valuable company after seeing unconfirmed growth over the last year.
On Monday, the Trump administration launched a national security investigation that could lead to new tariffs on semiconductors.
Restrictions arise despite Nvidia’s CEO Jensen Huang joining other high-tech executives and asking for Trump. Han recently dined with Trump at his Mar Lago resort and met the president at the White House in January.
Nvidia also said on Monday that it will spend up to $50 trillion on US AI infrastructure over the next four years through partnerships with companies including Taiwan’s TSMC and Foxconn. The Financial Times first reported on investment plans.
The company introduced China-centric H20 chips last year after the Biden administration imposed export controls on chips.
They are no longer powerful than the highest range of graphics processing units or GPUs that Microsoft, Openai, Google and Amazon are craving.
Despite the slower performance, the H20 has still seen strong demand in China. However, Beijing has taken steps to encourage local tech companies to use homemade chips from companies such as Huawei, allowing Nvidia’s products to be frozen with new energy efficiency rules.
Nvidia’s stock has fallen about 16% since the start of the year as fears grow over the growing arms race between the US and China around AI-powered infrastructure. They were also wiped out by the wider market defeats caused by the escalating trade war.
Nvidia’s latest AI chip deployment hits a stumbling block as past US administrations seek ways to control technology exports.
Former President Joe Biden has introduced sweep restrictions on chip-related technologies, including measures targeted by Nvidia on concerns that chips will make China easier to modernize its troops.
Since he took office, Trump has announced various measures suggesting he intends to continue pushing China to put pressure on the military to make it more difficult for the military to use American technology.
The US is worried that China will make more successful supercomputers more successful. Supercomputers are worried that they can be used for anything to support the liberation army, from developing high-sonic weapons to modeling nuclear weapons.
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China has repeatedly accused them of using national security tools such as export control to narrow its economic development. The Chinese Embassy in Washington did not respond to a request for comment.
The “AI Proliferation” rules introduced on the Biden administration’s last day are expected to come into effect in May unless the Trump administration decides to release it. It uses a “layered” licensing system that exports to all but a few countries, and places it exposes much more stringent control where it can export its most powerful US chips.
Last week, a Republican senator called on Commerce Secretary Howard Lutnick to scrap the rules.
