Nvidia $5.5 billion hit as US tighten chip export tariff to China
Computer chip giant, Nvidia says it will be hit with a $5.5 billion in cost after the U.S. government tightened export rules to China with fresh tariff restrictions on the export of its H20 artificial intelligence chips to China.
Nvidia, which has been the heart of artificial intelligence(AI) will now require licences to export its H20 AI chip, released last year and specifically designed to accommodate stringent US export controls to China.
The tech giant on Tuesday said, federal officials had advised them the licence 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.
The chipmaker said it will report approximately $5.5 billion worth of charges in its first quarter’s earnings on May 28, associated with H20 products for “inventory, purchase commitments, and related reserves.”
Nvidia tariff
Founded in 1993, Nvidia’s AI chips have been a key focus of US export controls. It was originally known for making computer chips that process graphics, particularly for computer games.
Before the AI revolution, it started adding features to its chips that it says help machine learning. It is now seen as a key company with its AI-powered tech spreading across the business world.
The company’s value took a hit in January when its rival Chinese AI app, DeepSeek, was reported to be built at a fraction of the cost of other chatbots.
At the time, the US was considered to have been caught off guard by their rival’s technological achievement.
Since DeepSeek’s R1 model shook global markets, the Trump administration’s imposition of curbs on the H20 chips was widely expected as American lawmakers on both sides of the aisle jointly called for tighter export controls on AI chips.
DeepSeek, along with many of China’s established tech giants, have been major consumers of Nvidia’s H20 graphic processing units. While Chinese tech heavyweight Huawei and AI chipmaker Cambroon have developed alternatives to H20s. According to Brady Wang, associate director of Counterpoint Research, the China-made chips generally lag in performance, particularly in software maturity.
The performance gap between Chinese chips and Nvidia’s is expected to widen, Wang said, because of “Nvidia’s superior ecosystem and manufacturing advantages,” even as DeepSeek’s rise demonstrates that high-performing AI models can be trained with lower-spec hardware.
