Nvidia Faces $5.5bn Loss After US Blocks Chip Exports to China

• Apr 16, 2025

Nvidia expects to lose $5.5 billion after new US rules tightened restrictions on exporting AI chips to China.

In a major blow to Nvidia, the US government has imposed tighter restrictions on chip exports to China, a move that could cost the company an estimated $5.5 billion. The tech firm revealed that its popular H20 artificial intelligence chip can no longer be shipped to China or Hong Kong without a special license. This chip has been a key product for Nvidia in the region.

The new licensing rule is part of growing tensions in the ongoing trade dispute between the US and China. Both countries have been raising tariffs and introducing export controls in an attempt to protect national interests and limit technological dependency. Nvidia said it was notified by US officials last week that the export restriction would apply "for the indefinite future."

According to Nvidia, the license requirement is meant to reduce the risk of the chips being used in or diverted to Chinese supercomputers, which the US considers a potential security concern. Following the announcement, Nvidia shares fell nearly 6% during after-hours trading.

The company added that the $5.5 billion charge would cover costs related to inventory, purchase agreements, and reserve allocations for the H20 chip. Despite the financial setback, some analysts believe Nvidia can manage the hit. Marc Einstein of Counterpoint Research noted that while the amount is significant, it is not devastating for Nvidia. He also suggested that these restrictions might be part of a broader trade negotiation and could eventually be eased.

The ban reflects a broader struggle between the US and China for dominance in the semiconductor and AI technology space. Rui Ma, founder of the Tech Buzz China podcast, said she believes the two countries' AI chip supply chains will eventually be "fully decoupled" if restrictions continue. She also pointed out that with China having an oversupply of data centers, it's becoming impractical for Chinese companies to rely on US-made chips.

Founded in 1993, Nvidia was once best known for its graphics chips used in gaming. But in recent years, it has shifted focus to AI, becoming a central player in the global race to dominate artificial intelligence. The export restrictions are now raising questions about the future of Nvidia’s presence in the Chinese market and the impact on the global tech industry.