Nvidia, making another headline, announced to take a quarterly charge of about $5.5 billion tied to exporting H20 graphics processing units to China and some other countries. The US government has recently told Nvidia that it would require a license to export chips to China and some other countries. The company is already facing new restrictions under AI diffusion rules, to be implemented from next month.
H20 is an AI chip that is put under restriction for Chinese export. The chip generated an estimated $12 billion to $15 billion in 2024. China is Nvidia’s fourth-largest region in terms of sales after the US, Singapore, and Taiwan. The US government put this license requirement in place for an indefinite period.
Export Restriction on Chips
This news could be a bad omen for the company, considering the stock market that slid 6% in extended trade on Tuesday. The US government put this restriction on Nvidia chips in developing supercomputers for military purposes.
In 2022, President Biden put restrictions on AI chip exports to prevent the export of advanced AI processors. Notably, DeepSeek, whose competitive model R1 used H20 in its research.
Nvidia CEO Jensen Huang has repeatedly said that the competition with China is growing, and for the second year, Huawei is listed as its biggest competitor.
Nvidia Stocks in the Trump Era
Against the protectionist move by Trump, Nvidia’s stock experienced a significant decline, falling 30% from its November 2024 peak of $153, resulting in a loss of around $1.1 trillion in market value. The company’s reliance on its deeply integrated supply chain in Southeast Asia, including China and Taiwan, made it particularly susceptible. Though the company regains its stocks, the volatility persists. This new license requirement may further decrease Nvidia’s revenue through chip exports.
