The Nvidia China export restrictions have led to a projected $5.5 billion loss for Nvidia, following the U.S. government’s decision to tighten controls on AI chip exports to China. The new rules specifically target Nvidia’s H20 chip, which was designed for the Chinese market to comply with previous export regulations. As a result, Nvidia’s stock has dropped by 6%, reflecting investor concerns over the company’s reduced access to one of its key markets.
Nvidia’s $5.5 billion loss causes a market dip
Nvidia warned that new U.S. export restrictions on its AI chips destined for China, Hong Kong, and Macau will trigger a charge of almost US$5.5 billion, sending its shares tumbling nearly 7%. The revelation sent waves through the computer chip industry and caused share prices of other chipmakers to tumble.
The U.S. now controls the order for Nvidia to get export licenses to sell its popular H20 advanced AI chips. As previously reported, this charge originated from the U.S. The new restrictions aim to prevent the diversion of chips to supercomputing jobs in other regions, which could enhance China’s capabilities.
Before, the H20 was the most high-tech product Nvidia could legally sell to China according to the old rule. The latest updates have virtually eliminated even that possibility. Nvidia said that the charge will include costs incurred due to unsold inventory and canceled orders in a filing, which is somewhat impacted by restrictive orders on advanced technology sales to China.
Broader Implications for the Semiconductor Industry
The U.S. government’s notification of Nvidia’s decision earlier this month is a major policy shift to limit China’s access to top-notch AI chips. Nvidia is spending hundreds of millions to produce chips in the country while adapting for the next 4 years. The announcement did not assuage jittery markets. The news impacted other major players in the semiconductor industry. After-hours trading showed that AMD’s stock was falling over 7 percent. Well-known companies, like Samsung, SK Hynix, and Taiwan Semiconductor, experienced a notable decline in their businesses and profits. As a result, this event indicated that the whole market was connected
