Nvidia to record $5.5 billion in charges due to U.S. export ban on its H20 chip for China

MW Nvidia to record $5.5 billion in charges due to U.S. export ban on its H20 chip for China

By Therese Poletti

One analyst has said export restrictions would result in ceding the Chinese AI market to Huawei

Nvidia Corp.'s shares were tumbling in after-hours trading Tuesday, after the chip giant disclosed in a regulatory filing that it expects to include charges of up to $5.5 billion in its fiscal first quarter, due to U.S. export requirements now imposed on its H20 chips for the Chinese market.

Nvidia $(NVDA)$ said late Tuesday in a Securities and Exchange Commission filing that the U.S. government told the company it now requires an export license for it to sell its H20 chips to China, and that rule will be in place for the foreseeable future. Analysts do not expect Nvidia to be granted such a license. The existing H20 chip was already designed to address the government's security issues with the Chinese market.

"On April 9, 2025, the U.S. government informed Nvidia that it requires a license for export to China (including Hong Kong and Macau) ...Nvidia's H20 integrated circuits and any other circuits achieving the H20's memory bandwidth, interconnect bandwidth, or combination thereof," Nvidia said in its brief regulatory filing. An Nvidia spokesman declined to comment further on the filing.

Nvidia said the U.S. government informed the company on Monday that the license requirement will be in effect for the indefinite future.

Analysts have been warning that if Nvidia were to get hit with export restrictions for its H20 chip, that would be the end of sales to the Chinese AI market, which would be ultimately be ceded to Huawei.

Bernstein Research analyst Stacy Rasgon warned last month that "an H20 ban would make zero sense" as it would "simply hand the Chinese AI market to Huawei."

Nvidia's fiscal first quarter ends on April 27. Nvidia said that those results are expected to include approximately $5.5 billion in charges associated with its H20 products for inventory, purchase commitments and related reserves. That charge is likely to mean the cost of writing down inventory for chips that were going to be shipped to the Chinese market, and writing off those customers' orders.

The H20 is a chip that Nvidia sells only in China to comply with performance restrictions.

Nvidia's shares were down more than 5% in after-hours trading.

-Therese Poletti

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 15, 2025 18:54 ET (22:54 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.