Nvidia says it will record $5.5 billion charge for H20 GPUs to China

Nvidia stated Tuesday it’s going to take a quarterly cost of about $5.5 billion tied to exporting H20 graphics processing items to China and different locations. The inventory slid greater than 6% in prolonged buying and selling.

On April 9, the U.S. authorities informed Nvidia it might require a license to export the chips to China and a handful of different nations, the corporate stated in a filing.

The disclosure is the strongest signal up to now that Nvidia’s historic development may very well be slowed by elevated export restrictions on its chips, which the U.S. authorities says can be utilized to create supercomputers for navy makes use of. Nvidia is scheduled to report fiscal first-quarter outcomes on Could 28.

Throughout President Joe Biden’s administration, the U.S. restricted synthetic intelligence chip exports in 2022 after which up to date the foundations the next yr to forestall the sale of extra superior AI processors. The H20 is an AI chip for China that was designed to adjust to U.S. export restrictions. It generated an estimated $12 billion to $15 billion in income in 2024.

Nvidia CEO Jensen Huang stated on the corporate’s final quarterly earnings name in February that income from China had dropped to half of pre-export management ranges. Huang warned that competitors in China is rising, and for the second straight yr, Nvidia listed Huawei as a competitor in its annual submitting.

China is Nvidia’s fourth-largest area by gross sales, after the U.S., Singapore, and Taiwan, in keeping with the corporate’s annual report. Greater than half of its gross sales went to U.S. corporations in its fiscal yr that resulted in January.

Nvidia’s H20 chip is similar to the H100 and H200 AI chips used within the U.S. and different nations, nevertheless it has slower interconnection speeds and bandwidth. It is primarily based on a earlier era of AI structure known as Hopper launched in 2022. Nvidia is now specializing in promoting its present era of AI chips, known as Blackwell.

DeepSeek, the Chinese language firm whose aggressive AI mannequin R1 unveiled earlier this yr upended markets, used H20 chips in its analysis.

Along with the prevailing Chinese language export controls, Nvidia additionally faces new restrictions on what it will probably export beginning subsequent month, underneath “AI diffusion rules” first proposed by the Biden administration.

Nvidia has contended that additional controls on its chips would stifle competitors and probably even erode U.S. competitiveness in expertise. The corporate beforehand stated it moved a few of its operations, together with testing and distribution, out of China after the 2022 export controls.

On the firm’s annual convention final month, when requested about Chinese language export controls, Huang stated Nvidia works to adjust to the regulation, however he additionally famous that about half of the world’s synthetic intelligence researchers are from China, and plenty of of these work at U.S.-based AI labs. 

Nvidia stated in Tuesday’s submitting that the U.S. authorities informed the corporate on Monday that the license requirement for H20 chips could be in impact “for the indefinite future.”

Nvidia shares have dropped 16% this yr, largely as a consequence of President Donald Trump’s announcement of widespread tariffs on prime buying and selling companions. Whereas exemptions have been made on varied electronics merchandise, together with smartphones, computer systems and semiconductors, Trump and a few officers stated over the weekend that the reprieve was short-term and a part of plans to use separate tariffs to the sector.

Shares of Superior Micro Gadgets declined greater than 7% in after-hours buying and selling on Tuesday following Nvidia’s disclosure. AI chipmaker Broadcom fell virtually 4%.