Nvidia reports $5.5 billion loss due to tightened export restrictions on AI chips to China
The US government’s tightening of export restrictions on AI chips to China has caused Nvidia, a semiconductor giant, to report billions in losses. The company will record a burden of $5.5 billion related to inventory and purchase commitments, according to Nvidia.
Prior to this, the Trump administration had imposed export controls on the H20 chip to China, indefinitely. This chip is primarily used for artificial intelligence. After the announcement, Nvidia’s stock price fell by around six percent after-hours.
The H20 was previously Nvidia’s most advanced chip for sale in China. The company was hoping to benefit from the upswing of the Chinese AI sector. Chinese companies like Tencent, Alibaba and ByteDance, the parent company of TikTok, have increased their orders for H20 chips as the demand for cost-effective AI models from DeepSeek, a startup, is booming.
It has been speculated for some time that export restrictions would be tightened. Therefore, Chinese companies like ByteDance, Alibaba and Tencent alone had ordered H20 chips worth at least $16 billion from Nvidia in the first three months of this year.
US President Donald Trump remains tough in the trade dispute with China. “China is up next. China needs to make a deal with us. We don’t have to make a deal with them” said a spokesperson, quoting President Trump. China is no different than any other country, only bigger, Trump reportedly said.
China needs the American consumer, or “to put it differently, they need our money” said President Trump at a press conference at the White House. The spokesperson had spoken to Trump and he gave her this statement about China.