Nvidia said it will incur a $5.5bn cost due to the US government’s tightened export rules imposed on China.
The chip manufacturer is one of the key providers behind the boom in artificial intelligence technologies, but it will now require a license to export its H20 AI processors to China.
An escalating trade war between the US and China has followed the sweeping tariff changes announced by US President Donald Trump at the end of March. The two countries have since announced retaliatory trade tariffs with steep fees imposed on exported goods.
As a result, Nvidia said Tuesday that the US government previously told it the H20 chip required a permit to be sold in China – including Hong Kong. The tech giant also said federal officials had advised them that the license requirement will be in effect for “the indefinite future”.
“The [government] indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China,” Nvidia said.
Nvidia is one of a few businesses in the US that is worth trillions of dollars. This is partly due to its crucial role in the development of GPUs fueling the generative AI boom.
The company has seen its shares rise by 1,400% since 2020. However, shares took a tumble (around 6%) in the hours after trading in the US – potentially wiping billions off its value.
The tech giant’s value has already taken a hit this year, with a drop in January following the reveal of DeepSeek, the Chinese AI app that was built at a fraction of the cost of most other chatbots. At the time, it was suggested that the US had been caught off guard by the technological advancements used to develop DeepSeek.
On Tuesday, Nvidia separately announced plans to build up to $500bn worth of AI infrastructure in the US over the next four years. The aim is to bolster its presence in the American manufacturing market.
Previously, the company designed its chips but largely outsourced the production to contractors, such as the Taiwan Semiconductor Manufacturing Company (TSMC). Currently, Taiwan has been hit by a 32% tariff by the US government.
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