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NVIDIA (NASDAQ:NVDA) shares fell 6% in after-hours trading to $105.42 after the company announced it expects up to $5.5 billion in charges related to U.S. export restrictions on its AI chips to China. The charges will be reflected in its upcoming Q1 2025 financial results and stem from inventory, purchase commitments, and reserves tied to its H20 chip.
The U.S. government informed NVIDIA on April 9, 2025, that a license is now required for exporting H20 chips to China, Hong Kong, Macau, and D:5 countries. On April 14, authorities confirmed the licensing rule would remain indefinitely. The export curbs aim to prevent NVIDIA's advanced chips from supporting Chinese military or supercomputing applications.
The H20 is the primary AI chip NVIDIA is allowed to sell in China under previous U.S. restrictions. The new controls severely impact the company’s access to one of its fastest-growing markets, even as Chinese tech giants like ByteDance, Alibaba (NYSE:BABA), and Tencent (HK:0700) had reportedly ordered over $16 billion worth of H20 chips in Q1 2025.
NVIDIA's announcement comes just a day after revealing a $500 billion plan to build AI supercomputers in the U.S., highlighting its domestic growth ambitions amid escalating U.S.-China tech tensions.
The broader chip sector also took a hit. Shares of AMD (NASDAQ:AMD), Intel (NASDAQ:INTC), Broadcom (NASDAQ:AVGO), Super Micro (NASDAQ:SMCI), and key supplier TSMC (NYSE:TSM) dropped between 2% and 7% in extended trading, reflecting investor concern over tightening export policies and potential ripple effects on global semiconductor supply chains.
As geopolitical pressures rise, NVIDIA’s future in the Chinese AI market remains uncertain, despite soaring demand driven by innovations like DeepSeek.
