Nvidia Stock Falls After $5.5 Billion Charge Linked to US Ban on AI Chip Exports to China
Nvidia shares plunged nearly 6% following its announcement of a $5.5 billion charge due to fresh US government export restrictions targeting its advanced H20 AI chip. This chip, specifically tailored for the Chinese market, has been a cornerstone in China’s growing artificial intelligence infrastructure.
US Export Ban Hits Nvidia’s China Strategy
According to Nvidia’s regulatory filing, the company was formally notified on April 9, 2025, that it would now require a license to export the H20 chip to China and several other countries. Just days later, US authorities declared that these rules would remain in place indefinitely. The likelihood of any licenses being granted remains uncertain.
The H20 chip was developed to remain compliant with earlier export regulations introduced during the Biden administration and tightened in 2023. It aimed to offer cost-effective AI processing power without breaching national security lines.
Chinese Tech Giants Already Invested
Major Chinese firms including Tencent, Alibaba, and ByteDance had been ramping up purchases of the H20, drawn by its strong performance in inference workloads—delivering real-time AI results to end users. Despite being less efficient in training AI models than other Nvidia chips, the H20 was becoming a key player in China’s data centers.
Nvidia CEO Jensen Huang had previously highlighted inference as the next dominant phase in the AI chip market, further cementing the H20’s importance.
National Security Concerns and Supercomputing Risks
US authorities have raised concerns over the H20’s high-speed connectivity, which may enable supercomputing capabilities—an area Washington has prohibited for Chinese access since 2022. A think tank in Washington, the Institute for Progress, warned that companies like Tencent could already be using H20 chips in potentially restricted environments.
Wider Impact on AI Chipmakers
The news sent shockwaves across the semiconductor industry. AMD shares dropped 7% and Broadcom fell 4% in after-hours trading, as investor anxiety grew over escalating US-China tech tensions and possible ripple effects on the broader chipmaking ecosystem.
The Road Ahead for Nvidia
Nvidia’s latest export hurdle places additional pressure on its global AI ambitions. As geopolitical friction deepens, the company must now navigate stricter trade rules while maintaining its dominant position in the global AI market.
For now, the market has responded with skepticism, but long-term impacts will depend on how US regulators enforce export rules and how Chinese companies adapt to the technology freeze.