Nvidia, a key player in the AI chip scene, is navigating a significant $5.5 billion hurdle due to stricter US export rules targeting China. The new regulations mean Nvidia now needs to get licenses to ship its popular H20 AI chips to China—a market where these chips have been in high demand.
This change is part of the ongoing trade tensions between the US and China, where both sides have imposed tariffs on various products. Following the announcement, Nvidia’s stock took a hit, dropping nearly 6% in after-hours trading.
Last week, the US government informed Nvidia that it would need an export permit for its H20 chips headed to China, including Hong Kong. Nvidia has been told this licensing requirement is indefinite, aimed at reducing risks associated with these chips potentially being used in Chinese supercomputers.
Nvidia hasn’t commented further on this situation yet, but it’s clear this is part of the US’s broader strategy to limit AI chip exports to China. Founded in 1993, Nvidia first made a name for itself with graphics processing chips crucial for gaming. Over time, they’ve integrated AI-enhancing features into their products.
Even with these challenges, Nvidia remains a key player in the spread of AI technology across various sectors. Earlier this year, Nvidia’s market value was impacted when news broke about a Chinese AI app, DeepSeek, developed at a lower cost than other chatbots, catching the US by surprise.
The anticipated $5.5 billion financial impact for Nvidia relates to its H20 product line, covering inventory, purchase commitments, and associated reserves.
