Nvidia Hit With $5.5B Blow as U.S. Expands AI Chip Export Ban to China
Nvidia announced on Tuesday that it expects to take a $5.5 billion hit after the U.S. government imposed new restrictions on exports of its H20 artificial intelligence chip to China.
The H20, designed specifically for the Chinese market, is now subject to licensing requirements under expanded U.S. export controls.
Washington Escalates Chip Restrictions
A spokesperson for the U.S. Commerce Department confirmed the new export controls, which will also impact AMD’s MI308 chip and similar products. The move follows the Biden administration’s ongoing efforts to tighten access to advanced technologies that could support China’s military or supercomputing capabilities.
“The Commerce Department is committed to acting on the President’s directive to safeguard our national and economic security,” the spokesperson said.
Shares of Nvidia and AMD slid in after-hours trading, with Nvidia falling 6% and AMD down 7%.
H20 Chip at Center of U.S.-China AI Tensions
The H20 is Nvidia’s most advanced chip available for China and has been critical in maintaining business ties with Chinese tech giants like Tencent, Alibaba, and ByteDance. These companies have been boosting orders of the H20 to power low-cost AI models, including those developed by startup DeepSeek.
While the H20 chip does not match Nvidia’s global offerings in training AI models, it excels at AI inference — the process of delivering AI-generated answers to users. Inference is rapidly becoming the dominant force in the AI chip market, and Nvidia CEO Jensen Huang recently emphasized the company’s strength in this space.
Supercomputer Capabilities Raise Red Flags
Despite being a lower-tier chip by U.S. standards, the H20 still features high-speed connectivity with memory chips and other processors, which officials fear could enable the construction of advanced supercomputers. Since 2022, U.S. policy has barred the export of chips that could contribute to Chinese supercomputing development.
According to the Institute for Progress, a nonpartisan Washington think tank, these concerns are not hypothetical. The group claims companies like Tencent and DeepSeek have already used H20 chips in facilities likely in violation of existing supercomputing export rules.
“DeepSeek’s supercomputer used to train their V3 model is also likely in breach of the same restrictions,” the organization wrote.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a "detective-like" mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
