Nvidia Projects $5.5 Billion Loss as U.S. Bans AI Chip Exports to China
Nvidia, a leading force in the AI chip market, has revealed it expects a $5.5 billion hit due to new U.S. export restrictions that block the sale of its advanced H20 AI chip to China and Hong Kong.
The U.S. government informed Nvidia last week that the chip now requires a license for export due to its potential use in Chinese supercomputers, a move the company confirmed would be indefinitely enforced.
The H20 chip had been one of Nvidia’s most sought-after products in the Chinese market. News of the restriction caused Nvidia’s shares to fall nearly 6% in after-hours trading.
“The license requirement aims to prevent advanced AI technologies from supporting supercomputing efforts in China,” Nvidia stated.
The chipmaker’s estimated losses cover inventory, purchase agreements, and reserves linked to the affected H20 units. While analysts like Marc Einstein of Counterpoint Research note Nvidia is well-positioned to absorb the impact, the restrictions are a major blow to both Nvidia’s revenue and the wider U.S. semiconductor sector.
Some experts suggest the move is part of a broader negotiation strategy and hint at potential policy adjustments or exemptions in the near future.
Founded in 1993, Nvidia originally focused on gaming graphics cards but has evolved into a global AI powerhouse, developing chips vital for machine learning, data centers, and large language models.
The latest trade restrictions deepen the ongoing tech rivalry between the U.S. and China. President Donald Trump has ramped up tariffs on Chinese goods, prompting China to respond in kind, with levies reaching up to 125% on U.S. imports.
Meanwhile, China’s economy reported a stronger-than-expected 5.4% GDP growth in Q1 2025, partly driven by a surge in exports as manufacturers raced to ship goods before tariffs took effect—a trend known as “front loading.”
Despite this growth, China’s property sector remains sluggish, and officials are looking to stimulus measures and domestic consumption to counteract the economic pressure from U.S. tariffs.
Industry observers like Rui Ma, founder of Tech Buzz China, believe the export bans will further decouple U.S.-China tech supply chains, arguing it no longer makes sense for Chinese firms to rely on American chips amid rising geopolitical risks.
