Nvidia on Tuesday said it would take US$5.5 billion in charges after the US government said it would require licences for exports to China of its H20 artificial intelligence chip, which has been one of its most popular chips.
Nvidia’s AI chips have been a key focus of US export controls as American officials have moved to keep the most advanced chips from being sold to China. Almost immediately after those controls were implemented, Nvidia began designing chips that would come as close as possible to US limits while still being legal to sell in China.
Nvidia shares were down about 6 per cent in after-hours trading. The H20 is currently Nvidia’s most advanced chip for sale in China and is central to its efforts to stay engaged with China’s booming AI industry.
Chinese companies including Tencent, Alibaba and TikTok parent ByteDance had been ramping up orders for H20 chips due to booming demand for low-cost AI models from start-up DeepSeek. Alibaba is the owner of the South China Morning Post.
While the H20 chip is not as fast at training AI models as Nvidia’s chips for sale outside China, it is competitive with some of those chips at a step known as inference, where AI models serve up answers to users. Inference is fast becoming the biggest part of the AI chip market.
Nvidia CEO Jensen Huang last month argued that Nvidia is well positioned to dominate that shift. But Nvidia on Tuesday said that the US government now plans to restrict H20 sales to China because of the danger that the chips could be used to build a supercomputer.
