Nvidia has predicted a $5.5 billion financial impact due to new US export restrictions on its H20 AI chips, which were specifically made for the Chinese market. The tightened regulations now necessitate a special licence to ship these chips, essentially limiting their distribution. The policy change is due to increased concerns in the US government over the possible application of high-performance chips in Chinese supercomputing projects.
The anticipated financial charge is to emerge in Nvidia’s fiscal quarter to end April 27, 2025. The charge mainly represents unsold inventory and pre-existing sales obligations related to the H20 chip. After Nvidia’s announcement, the company’s stock price declined by approximately 6% after hours.
This revamp is one of several moves by the US administration to limit the exportation of leading semiconductor technologies to China. Other than Nvidia, chip manufacturer AMD is also subject to licensing for its MI308 chip, which is included in the scope of the new policy. The US government has also stated that these restrictions are permanent, with the goal of inhibiting China’s capabilities in high-end computing.
As a reaction, Nvidia said it planned to spend as much as $500 billion over the next four years to construct AI-centered supercomputers in the United States. Nvidia plans to boost its local production capacity against changing conditions of exports. Industry experts, however, caution that these actions might provide Chinese companies such as Huawei with the chance to take the space in the home market.
The Semiconductor Industry Association has expressed alarm at not being consulted over the restrictions and what it says are the risks to technological advances in the United States. The association contended that the suddenness of the new restrictions could potentially stifle innovation and business continuity.
As trade policies are still evolving, chip makers and international markets closely watch how restrictions can mold future semiconductor demand and supply between the US and China.