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Nvidia Hit with $5.5 Billion Charge as U.S. Tightens AI Chip Export Restrictions

The U.S. government imposes indefinite licensing requirements on Nvidia's H20 chips for China, driving financial losses and reshaping the company's market strategy.

FILE PHOTO: The Nvidia logo and U.S. and Chinese flags are seen in this illustration taken on January 29, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
Nvidia's H20 graphics processing unit faces a new US license requirement for exports to China, with US officials telling the company they are concerned the chips may be used in a supercomputer there

Overview

  • Nvidia will absorb a $5.5-billion charge after the U.S. mandated indefinite export license requirements for its H20 AI chips to China.
  • The U.S. government aims to prevent advanced AI chip technology from being accessible to China, citing national security concerns.
  • Nvidia shares dropped approximately 6% in after-market trading following the announcement.
  • Chinese tech giants like Tencent, Alibaba, and ByteDance had increased orders for H20 chips prior to the restrictions, driven by demand for AI models.
  • Nvidia plans to invest in U.S.-based AI server production worth up to $500 billion over four years, aligning with domestic manufacturing priorities.