NVIDIA expects to take a $5.5 billion hit after the Trump administration effectively barred the chip designer from selling its AI processors in China, sending shares in one of America’s most valuable companies plunging.
It comes as part of a wider developing trade war between the US and China, with neither side seemingly willing to back down.
Export Controls Tighten
Late Tuesday, NVIDIA disclosed that its H20 AI chip, specifically designed for the Chinese market to comply with previous export controls, would now require a special license to sell in China for the “indefinite future.”
The H20 was intentionally limited in capabilities compared to Nvidia’s more powerful Blackwell series chips to comply with Biden-era restrictions.
According to Nvidia, the US government informed the company that the new rules address the risk that its products might be “used in, or diverted to, a supercomputer in China.” The chip designer now expects to report $5.5 billion in charges for the quarter ending April 27, covering both inventory and sales commitments for orders from major Chinese tech companies including Alibaba, ByteDance, and Tencent.
Rosenblatt Securities analyst Kevin Cassidy, who lowered his price target on NVIDIA stock from 220 to 200, said:
We see this as basically a ban, given the ongoing tariff war between the U.S. and China.
A Worrying Policy Shift?
The NVIDIA restriction appears to be part of a broader policy shift.
Advanced Micro Devices has also been impacted, stating it expects to take a charge of up to $800 million related to AI chip sales to China. The US government is now requiring AMD to seek licenses to export its MI308 products to China as well.
Meanwhile, Intel reportedly informed Chinese clients last week that it will require licenses to sell some advanced AI processors in China if they exceed certain technical thresholds, creating a united front in restricting China’s access to cutting-edge AI technology.
The coordinated approach follows reports that Trump’s administration is weighing additional penalties that could block Chinese AI firms like DeepSeek from buying US technology altogether.
The House Select Committee on the Chinese Communist Party has also opened an investigation into NVIDIA’s chip sales across Asia, examining whether the company knowingly provided critical technology to Chinese AI developers in potential violation of US rules.
Manufacturing Shift to America
In what could be strategic timing amid the China restrictions, NVIDIA announced plans to build up to $500 billion worth of AI infrastructure in the United States over the next four years. Production of Blackwell chips has already begun at TSMC’s Phoenix facilities, with NVIDIA also building supercomputer plants with Foxconn in Houston and Wistron in Dallas.
Jensen Huang, NVIDIA’s founder and CEO, said:
The engines of the world’s AI infrastructure are being built in the United States for the first time. Adding American manufacturing helps us better meet the incredible and growing demand for AI chips and supercomputers, strengthens our supply chain and boosts our resiliency.
This manufacturing initiative positions NVIDIA to supply infrastructure for what Huang calls “gigawatt AI factories”—massive computing facilities that will power the next wave of technological advancement, while aligning with broader US policy goals of securing domestic technology supply chains.
bad for business? The Enterprise Implications
For enterprise customers already struggling with AI hardware availability, these restrictions could exacerbate challenges in the short term. Organizations pursuing global AI initiatives now face a more fragmented technology landscape with different hardware ecosystems developing across geopolitical boundaries.
The acceleration of domestic chip manufacturing could eventually alleviate some supply constraints, which have plagued AI adoption. Additionally, the ongoing push for silicon independence among tech giants like Meta and OpenAI—both reportedly developing their own AI accelerator chips—may eventually create more diverse hardware options.
“The loss of China sales is manageable,” according to BofA Securities analyst Vivek Arya, who noted that strong sales of Blackwell processors in unrestricted markets will help offset losses, while potentially enhancing gross margins since H20 was a lower-margin product.
As the AI hardware landscape continues to evolve under geopolitical pressures, organizations will need to carefully consider hardware dependencies, supply chain resilience, and geographic deployment strategies in their AI implementation roadmaps.
