Nvidia Faces $5.5 Billion Loss Due to US Restrictions on Chip Sales to China

According to foreign media reports, Nvidia recently stated that it will face a loss of $5.5 billion after the US government restricted the export of its H20 AI chips to China. As China is a significant market for this chip, the export restrictions are expected to impact the company's business.

Nvidia stated that the $5.5 billion cost is related to the inventory, procurement commitments, and related reserves of the H20 product.

The chip giant also pointed out that the US government restricted the sale of H20 chips to China due to concerns that these chips could be used in supercomputers. Although the H20's computing power is lower than Nvidia's other chips, its high-speed connectivity with memory chips and other computing chips remains strong.

Nvidia said that the US government previously informed the company that exporting H20 chips to China requires a license, and recently notified Nvidia that these regulations will be implemented indefinitely.

How many export licenses the US government will ultimately approve—or whether it will approve any at all—remains unknown.

A spokesperson for the US Department of Commerce recently stated that new licensing requirements will be issued for exports including Nvidia's H20, AMD's MI308, and equivalent chips, and said: "The US Department of Commerce is committed to taking action in accordance with the President's directives to safeguard national and economic security."

Following this news, Nvidia's stock fell by approximately 6% in after-hours trading. Apart from the information disclosed in the announcement, Nvidia did not provide further comments on the matter.

AMD also did not immediately respond to requests for comment, and its stock fell by 7% in after-hours trading.

Prior to the announcement, Nvidia stated that, in response to the Trump administration's domestic manufacturing initiative, the company plans to collaborate with partners such as TSMC to build AI server clusters in the US worth $500 billion over the next four years.

Nvidia's AI chips have always been a key focus of US export controls. To maintain a technological lead in the AI field, the US government strictly restricts the export of high-end chips to China. Facing this control policy, Nvidia has begun developing alternative chip solutions for the Chinese market that comply with US technical restrictions.

The H20 chip, as Nvidia's highest-performance AI chip sold in China, is a core product in its strategy to tap into China's booming AI industry. It is reported that with the surging demand for low-cost AI models launched by startups like DeepSeek, Chinese tech giants including Tencent, Alibaba, and ByteDance, the parent company of TikTok, are continuously increasing their procurement of H20 chips.

Although the H20 chip's performance in AI model training is inferior to Nvidia's overseas versions, it shows significant competitive advantages in the model inference phase—the stage where AI systems output results to users. Notably, model inference is rapidly becoming a core growth driver in the AI chip market. Nvidia CEO Jensen Huang stated in March that Nvidia is well-positioned to lead this market transformation.