Key Takeaways
1. Nvidia warns that new Trump administration measures could reduce its revenue by $5.5 billion due to H20 chip export restrictions to China.
2. The company’s first quarter earnings may include $5.5 billion in charges linked to H20 products, affecting inventory and purchase agreements.
3. Nvidia needs a license to sell the H20 chip to China for the indefinite future, as it was previously designed for export.
4. Concerns arise over the potential use of the H20 chip in Chinese AI technologies, particularly with the introduction of the DeepSeek language model.
5. The Trump administration is investigating trade policies, including tariffs on semiconductor imports, following existing restrictions on chip exports to China since October 2022.
In a recent regulatory announcement made on Tuesday, Nvidia has cautioned that new measures from the Trump administration, which may restrict exports of the H20 chip to China, could potentially reduce the company’s revenue by as much as $5.5 billion.
Financial Impacts of H20 Chip
Nvidia stated that its first quarter earnings might reflect up to about $5.5 billion in charges related to H20 products, which include costs linked to inventory, purchase agreements, and associated reserves.
The filing noted that the Government has informed Nvidia it will need a license to sell this chip “for the indefinite future.” This chip was the most powerful one Nvidia had available for China and was already undergoing scrutiny by the White House, which was likely to ban its exports. The company had specifically designed and produced this chip with the intention of exporting it to China, as it adhered to current regulations.
Concerns Over Chinese AI Development
These new restrictions follow the introduction of the Chinese language model, DeepSeek, which posed a challenge to American models and raised alarms within the Government regarding the chip’s potential use in fueling such technologies.
The report mentioned that the Government believes “the covered products may be used in, or diverted to, a supercomputer in China.” This action could significantly affect Nvidia’s financial performance, estimating a $5.5 billion impact for the quarter ending on April 27th.
Ongoing Investigations into Trade Policies
In recent days, the Trump administration has also initiated investigations into the pharmaceutical and semiconductor sectors to assess whether additional tariffs on imports are necessary. Since October 2022, the United States has enacted restrictions on chip exports to China, which have intensified in recent days under the Trump administration.
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