Nvidia suffered significant share(Nvidia shares) price losses on Wednesday following its announcement that U.S. export regulations to China would force it to absorb $5.5 billion in expenses.
Because of new export requirements the firm must receive licenses to sell its H20 AI chip to China where this AI solution was very successful.
The new export rules emerged as both China and the United States intensified their trade conflict through multilateral trade tariff implementations affecting various products.
Nvidia shares fell almost 7% on Wednesday. The Nasdaq exchange it is listed on ended the day down 3.1%.
The company made an announcement Tuesday that the US government had mandated a required permit for selling its H20 chip to China and Hong Kong.
The tech giant said federal officials had advised them that 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 company declined to comment further when contacted by the BBC.
Marc Einstein from the Counterpoint Research consultancy said the $5.5bn hit estimated by Nvidia was in line with his estimates.
But he said “While this is certainly a lot of money, this is something Nvidia can bear”.
“As we have seen in the last few days and weeks, this may largely be a negotiating tactic. I wouldn’t be surprised to see some exemptions or changes made to tariff policy in the near future, given this not only impacts Nvidia but the entire US semiconductor ecosystem,” Mr Einstein added.
Nvidia Shares Slide Amid Rising US-China Tech Tensions
Chips remain a battleground in the US-China race for tech supremacy, and US President Donald Trump now wants to turbocharge a highly complex and delicate manufacturing process that has taken other regions decades to perfect.
AI chips produced by Nvidia persist at the centre of the United States export limitations. The computer chip company received its formal establishment in 1993 under which they first concentrated on producing graphics processing chips to serve the game industry.
Nvidia started developing sophisticated features for its chips in the years before artificial intelligence became mainstream. The business world tracks Nvidia because the company offers insight into the quick pace at which AI-driven technology spreads to various commercial sectors.
The company experienced a decline in value during January due to public reports about DeepSeek’s development as a Chinese AI app costing less than traditional competitors’ chatbots.
The technological breakthrough stunned US authorities as they had not anticipated this advancement from their competing nation.
Nvidia explained that its $5.5 billion charges pertained to H20 products by using the funds for inventory acquisition along with purchase obligations and related reserve build-up.
Rui Ma, founder of the Tech Buzz China podcast, said she expects the US and China AI semiconductor supply chains to be “fully decoupled” if restrictions stay in place.
She added: “It doesn’t make any sense for any Chinese customer to be dependent on US chips” especially since there is an oversupply of data centres in China.
