- Nvidia predicts $5.5 billion in H20 export-related costs to China and other nations
- H20 chips were already meant to be optimized for the Chinese market
- Company shares are down, market cap stays below $3 trillion
Nvidia is facing a massive $5.5 billion quarterly charge due to new US export restrictions on its H20 AI chips destined for China and other destinations, with company stock taking a fall following the revelation.
Starting April 9, the US government mandated a license for Nvidia to export H20 chips to certain countries, with no end date set, marking a costly change for the chipmaker.
The affected nations are China (including Hong Kong and Macau) and D5 countries – the United Kingdom, South Korea, Estonia, New Zealand and Israel.
“First quarter results are expected to include up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves,” Nvidia said in a SEC filing.
The tech giant noted the government-mandated license “addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China” – Nvidia’s fourth-biggest market by sales after the US, Singapore and Taiwan (via CNBC).
The H20 chips are less advanced versions of Nvidia’s H100/H200 chips, using the 2022 Hopper architecture, designed specifically to comply with now-dated US export restrictions for the Chinese market. In other regions, the company is now shifting its focus to next-generaiton Blackwell chips.
Moreover, Nvidia’s leaders have spoken out about the effects of the ongoing trade war.
“While cloaked in the guise of an ‘anti-China’ measure, these rules would do nothing to enhance US security,” VP of Government Affairs Ned Finkle said during Biden’s final days in office, before Trump’s tariffs came into effect.
Nvidia shares now stand at $112.20, down from a one-year high of $153.13. After spending two short periods of time as the world’s most valuable company, Nvidia’s market cap of $2.737 trillion now puts it in third position behind Microsoft, with Apple in first place and the only current $3-trillion company (just about).
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