By Nick Turner and Mackenzie Hawkins | Bloomberg
President Donald Trump’s administration has barred Nvidia Corp. from selling its H20 chip in China, an escalation of Washington’s tech battle with Beijing that will cost the company billions of dollars and hamstring a product line it explicitly designed to comply with previous US curbs.
The US government informed Nvidia on Monday that the H20 would require a license to export to China “for the indefinite future.” The new rules address Washington’s concerns that “the covered products may be used in, or diverted to, a supercomputer in China,” the company said in a filing. Nvidia warned it will report about $5.5 billion in writedowns during the current quarter, tied to inventory and commitments for the chip.
Its shares slid about 6% as the markets opened in New York, leading a broad selloff in semiconductor firms from the US to Japan. South Korean chipmakers Samsung Electronics Co. and SK Hynix Inc. were down by around 3%. Advanced Micro Devices Inc., which also said it expects to take a charge related to the Trump chip curbs, slumped as well.
The slide was compounded as ASML Holding NV reported disappointing financial results for the first quarter. The Dutch company, which sells the most advanced machines to manufacture chips, said its orders for the first quarter were almost a billion euros less than expected and warned that tariffs will add to uncertainty in the industry.
Nvidia’s stock had dropped 16% this year through Tuesday’s close, after gaining more than 200% in 2024.
The new restrictions are among the clearest signs yet that Trump will stay the course on Washington’s efforts to limit China’s semiconductor and artificial intelligence ambitions. His team has been exploring such a step since the start of the administration, Bloomberg News reported in January, continuing conversations that began under President Joe Biden.
Trump’s commerce secretary, Howard Lutnick, has pledged to be “very strong” on China chip curbs — particularly after the emergence of AI startup DeepSeek. He recently sanctioned dozens of Chinese firms that Trump officials allege are aiding Beijing’s military efforts. In the Asian country’s chipmaking arena, Huawei Technologies Co.’s AI accelerators are the closest competitor to Nvidia’s and AMD’s offerings, though they still lag significantly in terms of performance.
“The US government’s strengthened regulations on Nvidia can be seen as part of the ongoing trade war between the US and China,” said Tomo Kinoshita, global market strategist at Invesco Asset Management. “However, it is also a policy driven by concerns over China’s rise in the electronics sector, and in that sense, it is likely to become a permanent policy.”
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.
Nvidia designed the H20 chip in response to 2023 measures that restricted another China-focused processor, the H800, which the company debuted following the initial curbs. The H20 is intended to be less powerful, and it doesn’t perform as well as Nvidia’s top-of-the-line offerings for the training of models. But it can still be used to develop and run AI software and services, and it’s particularly well-suited to the inference stage: the point at which AI models recognize patterns and draw conclusions.
Under the Biden administration, officials had prepared regulations that would have restricted Nvidia’s H20 and B20 chips, a senior Biden official said, and they presented those rules to then-Commerce Secretary Gina Raimondo. Biden staff estimated such curbs would make it around 3% to 6% more expensive to develop an AI model in China — at a roughly $12 billion cost to Nvidia, said the official, who requested anonymity to speak candidly. Asked how Biden’s team arrived that number, the official said it was based on an estimate that Nvidia would sell around a million H20s in China, at $12,000 a piece. Nvidia declined to comment.
But Raimondo ultimately chose not to pursue the measures, in part because the Biden administration was working on a separate set of AI chip restrictions affecting most of the world. That so-called AI diffusion rule, unveiled during Biden’s final week in office, is now the subject of a fierce lobbying effort in Washington.
Nvidia has staunchly opposed the framework, arguing that it will weaken American companies and reinforce China’s determination to make itself independent of US technology. Trump’s team has indicated they want to strengthen and streamline the measures, Bloomberg News has reported, though what that entails remains unclear. Companies are required to start complying with the global restrictions in about a month.
As for the H20 rules, Nvidia’s writedown suggests that the company may miss out on $14 billion to $18 billion in revenue for the year, Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada said in a note. “If restrictions persist, Nvidia’s data-center exposure to China could normalize to low- to mid-single digits, similar to early 2024 levels,” they said. That was before production of the H20 ramped up.
The new restrictions follow an NPR report that Trump had backed off from pursuing the H20 controls, in exchange for Nvidia investing in data centers. The company just announced that it would build up to $500 billion worth of AI infrastructure in the US over the next four years, a figure that includes plans that were already underway. A representative for the White House didn’t respond to a request for comment.
AMD said it expects to take a charge of as much as $800 million after completing an initial assessment of the Trump administration’s new license requirement for the export of the chipmaker’s MI308 products.
What Bloomberg Intelligence Says
The move poses challenges for Nvidia — it engineered the H20 chip specifically to comply with earlier US export controls — and for Chinese AI companies, which now face licensing hurdles to acquire the chip and exploit its powerful inference capabilities for widespread AI deployment and sustained innovation.
– Michael Deng, analyst
–With assistance from Brody Ford, Stephanie Lai, Winnie Hsu, Jillian Ward and Debby Wu.
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