Nvidia faces a $5.5 billion hit after the Trump administration barred the sale of its H20 AI chip in China. This move escalates the US-China tech war, impacting Nvidia's revenue and potentially disrupting China's AI development. The US government's decision, communicated to Nvidia on April 9th, requires the company to obtain export licenses for H20 chips indefinitely, addressing concerns that the chips could be used in Chinese supercomputers. The H20 chip was specifically designed to comply with previous US restrictions, making this ban a significant setback for Nvidia.
Analysts predict Nvidia's China business could plummet, prompting Chinese tech giants like ByteDance and Tencent to seek domestic alternatives such as Huawei, Cambricon Technologies and Hygon Information Technology. The ban is expected to accelerate China's push for semiconductor self-reliance. Nvidia's stock price has already taken a hit, and the company anticipates significant charges related to H20 inventory and purchase commitments. This situation highlights the growing tensions in the global tech landscape and the challenges faced by companies navigating the US-China trade war. The restrictions also extend to AMD's MI308 chip, signalling a broader impact on the AI chip market.
Nvidia's CEO Jensen Huang previously attended a $1 million-a-head dinner at Trump's Mar-a-Lago resort, after which plans to move forward with export controls on Nvidia's H20 accelerators were reportedly paused. The US Commerce Department has stated its commitment to safeguarding national and economic security through these export controls.