[SAN FRANCISCO / HONG KONG] Nvidia faces new US restrictions on the export of its H20 chip to China, a policy change that will cost the company billions of US dollars and hamstring a product line that it explicitly designed to comply with previous curbs.
The government informed Nvidia on Monday (Apr 14) that the H20 would require a license to export to China “for the indefinite future”, the company said in a regulatory filing on Tuesday. Officials said that the new rules address concerns that “the covered products may be used in, or diverted to, a supercomputer in China”, according to the filing.
Nvidia warned that it will report about US$5.5 billion in charges during the fiscal first quarter from “inventory, purchase commitments and related reserves” tied to the H20 line.
The company’s shares slid about 6 per cent in late trading following the announcement. Advanced Micro Devices, which competes with Nvidia in the artificial intelligence (AI) chip market, slumped as well.
A representative for the White House did not immediately respond to a request for comment.
Bloomberg News reported in January that the Trump administration was exploring such a step. Though the H20 can be used to develop and run AI software and services, it’s a scaled-down product specifically designed not to be too powerful.
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But now it’s also seen as potentially too risky to export to China, the main US rival in AI and the top target of US President Donald Trump’s growing trade war.
Nvidia has argued that further tightening restrictions will only reinforce China’s determination to make itself independent of US technology and that the clampdown will weaken American companies.
The new restrictions follow a National Public Radio report that Trump had backed off from pursuing the H20 controls, in exchange for Nvidia investing in AI data centres. The company just announced that it would build up to US$500 billion worth of AI infrastructure in the US over the next four years, a figure that includes plans that were already underway.
The battle over limits on chip exports has raged on for years. US officials first barred Nvidia and other AI chipmakers from selling their most advanced models to China in October 2022, over concerns that the technology could give Beijing a military edge.
Since then, the China controls have ballooned to include an increasingly large set of semiconductor manufacturing tools, as well as a wider range of both processors and high-bandwidth memory chips, which are essential for AI applications.
In addition to capturing a growing set of technologies, the Biden administration also expanded the geographic scope of the AI chip measures – first to some 40 countries that officials worried were providing a backdoor for Chinese firms to access banned chips, and then, in president Joe Biden’s last week, to the entire world. Trump officials have indicated that they want to strengthen and streamline that global framework.
The latest rules for Nvidia are a sign that the Trump administration will stay the course on the US government’s approach to Chinese tech development. They follow earlier sanctions on dozens of Chinese firms that Trump officials allege are aiding Beijing’s military tech efforts. BLOOMBERG
