US semiconductor giant Nvidia has warned of a projected $5.5 billion financial hit following the Biden administration’s decision to extend strict export controls on advanced AI chips to China. The company revealed it now requires a special license to sell its high-demand H20 chips to Chinese buyers, including in Hong Kong — a move that further inflames the already tense tech rivalry between Washington and Beijing.
The announcement, detailed in a regulatory filing, comes after US officials confirmed the export restrictions would remain indefinitely. Shares of Nvidia dropped by nearly 6% in after-hours trading, underscoring market concerns about the long-term impact on its China operations. The H20 chip, designed for artificial intelligence applications, had been a key product in Nvidia’s China portfolio.
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The US government cited national security concerns, warning that such chips could be used in or redirected to Chinese supercomputers — an area of strategic competition. The projected $5.5 billion cost reflects inventory write-downs, purchase commitments, and other reserves tied to the now-restricted H20 line.
This latest development deepens the semiconductor rift between the US and China, where both nations are ramping up controls on critical technologies. Analysts suggest the restrictions could push Chinese firms to fast-track domestic chip development, while US companies like Nvidia may be forced to pivot towards alternative markets or push for policy relief.
The standoff marks yet another escalation in the ongoing decoupling of tech supply chains, with implications reaching far beyond a single company. As both sides dig in, industry insiders warn of a fragmented global semiconductor landscape in the years ahead.
